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How  Business  is  Done. 


o 

UJ 


Z,c 


A  TREATISE  ON 


BUSINESS  PRACTICE 


OR 


HOW  BUSINESS  IS  DONE 


DESIGNED  AS  A  TEXT-BOOK  IN  ALL  SCHOOLS  WHERE  ANY  IN- 

STRUCTION  FOR  BUSINESS  LIFE  IS  GIVEN, 

AND    AS  A 


BOOK  OF  REFERENCE  FOR  ALL  CLASSES, 


J.  A.  LYONS   fc?  COMPANY 
CHICAGO  NEW  YORK 


I 


Copyrighted  by 

O.  M.  POWERS. 

1896. 


PREFACE. 

THE  plan  of  this  book  has  been  upon  the  author's  mind  for  Several  years.  Much  of  the 
information  contained  herein,  has  not  heretofore  been  accessible,  so  far  as  he  knows,  in  any 
form,  yet  he  has  been  and  still  is  of  the  opinion,  that  it  is  all  matter  with  which  the  young  person 
about  to  enter  the  office  should  be  familiar.  The  business  colleges  have  been  doing  much  for 
such  young  people,  but  their  efforts  have  largely  been  directed  along  the  line  of  accounts,  with 
such  incidental  training  in  business  methods  as  was  possible.  This  book  deals  with  the  transac- 
tion of  business  itself,  and  for  that  reason  should  be  of  interest  to  all,  as  it  is  the  primary  thing 
and  the  record  of  the  transaction  secondary.  Every  teacher  knows  the  difficulty  he  has  in  direct- 
ing the  attention  of  his  pupils  to  the  "  little  things,"  and  yet  the  knowledge  of  the  "little  things" 
is  what  makes  their  advent  to  an  office  easy.     This  book  is  a  treatment  on  the  "  little  things." 

The  author  claims  that  there  is  nothing  in  this  book  which  should  not  be  familiar  to  every 
such  person.  There  are  also  many  facts  contained  herein  which  cannot,  from  the  nature  of 
things,  be  incorporated  in  a  series  of  transactions  intended  to  illustrate  business  practice.  These 
things  the  instructor  may  intend  to  point  out  incidentally,  but  without  some  regular  time  being 
set  apart  for  them,  and  some  previous  study  of  the  question  being  required,  the  opportunity  will 
often  pass  and  the  student  go  uninstructed. 

Further  experience  may  suggest  some  changes  in  the  plan,  and  the  addition  of  other  matter, 
or  a  more  extended  treatment  of  some  topics  treated  herein.  To  this  end,  criticisms  and  suggest- 
ions are  solicited,  that  future  editions  may  be  better  suited  to  the  wants  of  all. 

The  author  takes  this  opportunity  of  acknowledging  his  obligation  to  the  numerous  friends, 
who  were  so  kind  in  giving  him  information  peculiarly  within  their  knowledge.  Of  the  many  on 
whom  he  found  it  necessary  to  call,  not  one  but  received  him  most  cordially,  and  if  necessary, 
went  to  personal  inconvenience  to  comply  with  his  request  for  forms  and  information.  If  there 
was  no  other  satisfaction  in  the  preparation  of  this  book  than  the  author  has  had  in  his  associa- 
tion with  business  men,  in  their  quick  appreciation  of  his  wants,  and  in  their  cordial  sympathy 

with  his  object,  it  would  be  sufficient. 

J.  A.  h. 
Chicago,  December  1,  1896. 


54! 748 


BUSINESS    PRACTICE 


OR 


HOW    BUSINESS    IS    DONE. 


INSOLVENCY  technically  exists  when  one's  liabilities  exceed  his  resources  but  it  does  not  necessarily  follow 
in  this  case  that  business  must  be  suspended.  If  his  credit  be  good  he  may  still  continue  and  in  the  end  may 
again  become  solvent. 
Sometimes  one  is  forced  into  insolvency  when  his  resources  far  exceed  his  liabilities.  This  usually  occurs 
in  a  depression  or  stagnation  of  business  when  one  or  more  creditors  demand  an  immediate  settlement  of  their 
claims  in  cash,  while  most  of  his  resources  consists  of  other  forms  of  property  that  are  not  readily  convertible  into 
cash.  Thus  he  may  have  no  cash  but  a  large  stock  of  merchandise  or  a  large  amount  of  notes  and  these  the 
banks  refuse  to  accept  as  collateral  security.  In  this  case  nothing  remains  but  to  make  an  assignment  of  all 
property  to  a  third  person,  who  will  convert  the  assets  into  cash  as  rapidly  as  possible  with  as  little  sacrifice  as 
possible,  and  from  this  fund  pay  the  creditors.  If  the  assets  be  large  enough  the  creditors  will  be  paid  in  full,  if 
not  each  will  be  paid  such  a  percentage  of  his  claim  as  the  assets  will  justify.  In  any  case  the  creditors  are  all 
treated  alike.  But  in  some  states  the  law  permits  the  debtor  at  the  time  of  the  assignment  to  name  certain 
creditors  that  are  to  be  paid  in  full  before  the  remaining  creditors  are  allowed  anything.  Whether  preferred 
creditors  are  allowed  or  not  will  be  taken  into  account  by  the  credit  man  in  estimating  the  amount  of  credit  to 
which  a  debtor  may  be  entitled.  So  a  man  might  be  granted  more  credit  in  one  state  than  if  he  were  in  another, 
because  the  laws  in  that  state  make  the  collection  of  accounts  easier.  The  object  of  the  assignment  is  that  all  the 
creditors  or  a  certain  class  of  them  may  receive  equal  treatment.  If  no  assignment  were  permitted  the  first 
creditors  to  enforce  their  claims  would  be  the  first  to  be  satisfied  while  others  might  get  nothing.  An  assignment 
is  thus  eminently  the  fairest  to  all.  The  conservative  business  man  is  careful  to  avoid  investments  in  such 
resources  that  he  cannot  protect  claims  that  may  be  urged  against  him. 

Goods  when  sold  at  a  forced  sale  never  bring  so  high  a  price  as  when  disposed  of  at  private  sale.  Conse- 
quently though  one  may  be  solvent  when  forced  to  assign  the  forced  sale  may  so  reduce  his  assets  as  to  render 
him  in  fact  insolvent. 

WHOLESALERS   AND  JOBBERS. 

The  distinction  between  wholesalers  and  retailers  is  one  in  the  size  of  their  respective  sales.  A  wholesaler 
buys  of  importers  and  manufacturers,  but  in  large  quantities,  and  sells  to  retail  dealers  in  smaller  quantities.  He 
deals  in  regular  stock,  staples  ;  while  a  jobber  deals  in  job  lots.  A  jobber  is  constantly  on  the  lookout  in  the  mar- 
ket for  goods  in  his  line  that  are  "broken  lots,"  "seconds,"  "off  sizes,"  slightly  soiled  or  remaining  lots  to  clear  up 
the  stock  that  can  be  bought  at  a  bargain.  He  will  sell  to  either  the  retailer  or  the  wholesaler.  Sometimes  a 
dealer  may  be  both  a  wholesaler  and  a  jobber. 

An  importer  is  one  who  purchases  goods  in  a  foreign  country  and  imports  them  to  this  country  for  sale. 
He  may  also  be  a  wholesaler  or  jobber  or  both. 

WRITTEN    CONTRACTS. 

The  well  posted  business  man  knows  that  certain  contracts  must  be  iu  writing  in  order  to  be  valid.*  Such 
contracts  when  making  he  will  not  fail  to  commit  to  writing.  He  also  knows  that  all  contracts  that  are  made  in 
writing  are  supposed  to  mean  just  what  they  say.  That  neither  party  will  be  permitted  to  explain  orally,  add 
to,  or  contradict  what  is  stated.  Be  careful  then  how  all  your  written  contracts  are  worded.  See  that  they 
exactly  and  fully  express  your  meaning. 

Though  you  are  not  legally  required  to  commit  a  contract  to  writing,  yet  if  it  is  long  and  has  many  details, 
or  may  not  be  performed  for  a  long  time,  it  should  be  in  writing  as  an  act  of  prudence.  You  might  be  your  only 
witness  to  your  verbal  contract,  and  in  case  of  your  death  your  estate  might  suffer  severely  from  your  lack  of 
prudence. 

When  the  general  terms  of  a  contract  have  been  agreed  upon,  and  all  that  remains  to  be  done  is  to  commit 
it  to  writing  which  is  to  be  done  by  you  or  the  other  party  thereto,  do  not  hesitate  to  do  it  either  yourself  or  by 
your  attorney.  You  can  of  en  then  incorporate  many  details  into  it  that  will  be  to  your  advantage.  You  can  in 
this  way  often  secure  many  minor  concessions  from  the  other  party,  concessions  that  in  the  end  may  be  worth 
much  to  you. 


See  Commercial  Law  page  39,  also  section  139. 


6  HOW  BUSINESS   IS   DONE. 

RECEIPTS. 

The  importance  of  taking  a  receipt  in  some  form  for  all  money  paid  out  cannot  be  overestimated.  It  is 
also  prudent  in  many  cases  to  take  a  receipt  for  personal  property  when  delivered,  and  especially  is  this  true  when 
you  are  only  the  custodian  of  the  property  and  not  its  owner.  When  the  receipt  is  for  money,  it  should  be  dated 
and  the  amount  of  money  paid  should  be  stated  as  well  as  the  purpose  for  which  it  is  paid,  as:  "on  account," 
or  "in  full  of  account,"  etc. 

Receipt. 


All  receipts  taken  should  invariably  be  preserved,  and  never  destroyed,  for  witnesses  may  die  or  memory 
may  fail,  and  you  or  your  representative  may  be  put  to  much  trouble  and  inconvenience,  if  not  loss. 

It  must  be  remembered,  however,  that  receipts  are  an  exception  to  the  rule  of  law  stated  in  the  previous 
section.     They  may  be  disputed  by  oral  evidence. 


PAID  NOTES  AND  DRAFTS. 


What  has  been  said  about  preserving  receipts  will  apply  equally  well  to  your  notes  and  acceptances  which 
you  have  paid.  These  should  invariably  be  marked  paid  or  cancelled  by  the  holder  of  them  when  he  receives  his 
pay,  and  returned  to  you.  Do  not  destroy  them  nor  mutilate  them  by  even  tearing  off  your  signature,  but  file 
them  away  for  future  reference. 

Promissory  Note. 


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In  case  they  are  given  for  real  estate,  and  are  secured  by  a  trust  deed,  the  trustee  will  insist  on  seeing  the 
cancelled  notes  before  you  can  secure  ms  reieasc. 


HOW   HUSINESS   IS   DONE. 


Union  National  Bank 

CHICAGO. 


DEPOSITED  IB"Z" 


HOW  TO   DEPOSIT. 

Having  received  a  proper  introduction  to  the  bank  with 
whom  you  wish  to  open  an  account,  and  having  received  their 
consent  to  it,  you  are  ready  to  make  your  deposit.  The  bank 
will  supply  you  with  deposit  tickets  free  of  charge.  First  fill 
in  your  name  in  the  ticket  and  date  it.  Opposite  "  Currency  " 
put  the  amount  you  will  deposit  of  it,  and  the  same  of  coin. 
Under  "  Checks  "  if  a  check  is  drawn  on  a  city  bank  write  the 
name  of  the  bank  but  if  an  out-of-town  check,  write  the  name 
cf  the  city.  Any  other  form  of  remittance,  such  as  express 
orders,  should  be  included  here  and  the  total  placed  in  the 
second  column,  opposite  the  word  "Checks."  It  is  your  busi- 
ness to  fill  out  this  slip.  Do  not  expect  the  bank  clerk  to  do  it. 
As  a  voucher  for  your  deposit  you  may  get  a  cashier's  check 
a  certificate  of  deposit,  or  a  bank  book.  If  a  bank  book,  an 
entry  will  be  made  of  the  amount  of  the  deposit  by  the  bank 
official  who  receives  your  deposit,  and  on  the  left  hand  side  ; 
when  you  wish  your  account  checked  up  with  the  bank,  which 
is  usually  at  the  end  of  the  month,  you  will  hand  in  your  book 
to  the  bank  who  will  enter  your  checks  which  they  have  paid 
on  the  right  hand  side,  and  balance  the  book.  When  your  book 
is  returned  to  you  it  will  contain  these  paid  or  canceled  checks. 

ABOUT   DEPOSITING. 

Bear  in  mind  that  the  bank  may  not  be  as  anxious  for  your 
business  as  you  may  imagine.  In  Chicago  the  best  banks  do 
not  care  to  open  an  account  with  a  customer  unless  the  monthly 
balance  will  average  about  $500.  They  claim  that  anything 
less  than  that  does  not  pay  the  cost  of  clerk  hire  and  other  expenses  incidental  to  the  care  of  the  account.  Be  as 
little  trouble  to  the  bank  as  possible.  Always  have  your  deposits  properly  and  orderly  arranged  before  presenting 
ihem  to  the  receiving  teller.  See  that  your  figures  on  the  deposit  ticket  are  absolutely  correct.  Arrange  the  bills 
all  right  side  up,  small  bills  on  top.  Separate  the  coin,  each  kind  by  itself,  and  as  far  as  possible  each  denomi- 
nation by  itself.  Do  not  deposit  your  snlall  coins,  such  as  pennies,  nickels  and  dimes,  until  you  have,  say,  at 
least  a  dollar  in  nickels  or  fifty  pennies;  then  roll  these  tightly  in  a  package,  each  denomination  by  itself,  and  place 
in  ink  on  the  wrapper  the  denomination,  amount  and  your  name.  The  teller  will  verify  your  count  of  these 
coins  at  his  leisure. 

ADVANTAGES  OF  A  BANK  ACCOUNT. 

There  are  several  advantages  to  a  business  man  in  keeping  an  account  with  a  bank  : 

1.  The  average  business  man  cannot  properly  protect  his  funds  from  fire  and  burglars. 

2.  It  enables  him  to  pay  his  bills  by  check. 

3.  It  gives  him  an  acquaintance  with  a  bank  where  he  can  go  in  time  of  need  and  secure  accommodation 
in  the  way  of  a  loan. 

4.  It  saves  him  the  trouble  of  presenting  all  checks' and  money  orders  that  he  might  receive  in  the  course 
of  business. 

5.  It  enables  him  to  use  the  bank  as  a  means  of  collecting  his  drafts  on  customers. 


CHECKS. 

The  practice  many  business  houses  have  of  paying  all  bills  by  check  is  to  be  earnestly  recommended.  The 
check  shows  the  date  of  payment,  and  the  amount  thereof,  and  when  paid  by  the  bank  will  be  returned  to  the 
drawer  bearing  the  endorsement  of  the  payee.     It  then  operates  as  a  receipt,  and  should  be  religiously  preserved. 

Another  advantage  in  a  payment  by  check  over  currency  is  that  there  is  never  a  contention  over  the 
amount  paid  or  that  a  part  of  the  payment  was  in  a  worthless  or  depreciated  currency  or  coin. 

Deposit  your  currency  as  it  is  received,  and  draw  your  checks  to  pay  all  bills  that  it  is  possible  to  pay  in 
this  manner.  Checks  should  never  be  signed,  nor  an  endorsement  made  until  needed.  Checks  should  usually  be 
made  payable  "to  order"  and  not  "to  bearer,"  for  aside  from  the  danger  from  the  loss  or  theft  of  such  a  check 
the  payee  might  in  some  states  transfer  it  without  endorsing  it,  and  in  that  case  you  lose  its  value  as  a  receipt. 

Always  remember  that  personal  checks  should  be  presented  at  least  on  the  next  business  day  after  their 
receipt,  or  in  case  of  failure  of  the  bank  you  may  be  the  loser. 


s 


HOW  BUSINESS  IS  DONE. 


A  personal  check  should  not  be  sent  as  a  remittance  a  long  distance  from  home,  for  it  is  subject  to  a  fee  for 
collection.  Banks  near  large  cities  often  have  arrangements  made  by  which  their  checks  may  be  cashed  at  a 
certain  bank  in  the  city.     This  is  a  great  convenience  to  its  customers,  for  its  checks  will  then  pass  at  par. 

See  page  39. 

KEEPING  A  BANK  ACCOUNT. 

When  a  bank  account  is  kept  subject  to  check,  it  becomes  important  for  the  depositor  to  know  the  best 
means  of  keeping  an  accurate  tab  on  the  amount  he  has  to  his  credit  in  the  bank.  Some  bookkeepers  keep  an 
account  in  the  ledger  with  the  bank,  debiting  it  for  deposits  and  crediting  it  for  checks.  In  case  a  bill  of  goods 
is  bought,  and  a  check  given  in  payment,  the  above  method  necessitates  two  entries.  For  this  reason  a  large 
number  of  bookkeepers  prefer  to  treat  the  balance  in  the  bank  the  same  as  cash  in  the  drawer.  This  saves,  as  we 
will  see,  one  entry  on  the  books  of  account.  Most  check  books  are  made  with  two  columns  for  dollars  and 
cents  between  the  check  and  the  stub.     When  the  first  deposit  is  made,  the  amount  is  entered  by  the  depositor  on 


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the  stub  of  his  check  book,  and  the  amount  placed  in  the  money  column.  When  the  first  check  is  drawn  the 
amount  is  placed  in  the  money  column,  as  shown  in  the  cut,  and  deducted  from  the  balance.  This  takes  but  a 
moment's  time,  and  the  depositor  has  the  satisfaction  of  knowing  just  what  his  balance  is  at  any  moment.  When 
the  account  is  kept  in  this  manner,  a  check  given  is  the  same  as  cash  paid  from  the  drawer. 

As  all  the  writing  in  the  pass  book  is  done  by  the  bank  official,  it  will,  at  first,  only  show  the  deposits 
which  will  be  found  on  the  left-hand  side. 

Whenever  he  wishes,  the  depositor  may  hand  in  his  pass  book  to  be  balanced  or  written  up.  The  bank  will 
then  enter  on  the  right-hand  side,  all  his  checks  paid  by  the  bank,  and  inserting  the  balance,  rule  up  the  book. 
Care  should  now  be  taken  to  see  that  this  balance  agrees  with  the  balance  shown  on  the  stub  of  the  check  book. 

If  all  the  checks  issued  have  been  presented,  these  balances  should  agree,  and  if  they  do  not,  the  point  of 
difference  should  be  ascertained  at  once.  When  the  bank  returns  the  pass  book,  balanced,  it  also  returns  the 
depositor's  canceled  checks.  From  these  it  can  be  ascertained  whether  all  checks  issued  have  been  presented  or 
not.     Those  that  are  still  outstanding  should  be  noted,  and  a  list  of  them  made  on  the  stub  of  the  check  book. 


HOW   BUSINESS  IS   DONE. 


-DRAWING  CHECKS. 

Checks  of  the  most  approved  form  provide  for  stating  the  amount,  both  in  words  and  in  figures.  If  these 
do  not  agree  the  bank  will  pay  the  amount  stated  in  words.  In  drawing  a  check  be  careful  to  write  itro  that  it 
cannot  be  easily  raised.  If  you  are  careless  in  this  regard,  and  the  bank  should  pay  your  check  which  had  been 
raised,  you  would  be  the  loser.  In  writing  the  amount  begin  back  to  the  extreme  left  of 
the  line,  and  if  the  words  do  not  completely  fill  the  space  allotted,  draw  a  wavy  line  to  fill  out 
the  space. 

There  are  many  devices  ior  preventing  the  raising  of  checks  and  bank  drafts.  One  is  to 
use  a  paper  having  on  it  fine  tinted  lines  ;  any  erasure  on  the  lines  readily  showing. 
Another  is  a  fine  perforator  composed  of  numerous  dies  that  almost,  if  not  quite  perforate  the 
paper ;  this  is  stamped  over  the  amount  and  makes  it  almost  impossible  to  change  it. 
Another  is  to  cut  out  of  the  paper  itself  figures  indicating  the  amount  of  the  check  or  draft. 
Still  another  method  is  to  have  printed  on  one  end  of  the  check  a  design  like  the  cut.  The 
right  hand  column  is  units  the  next  tens,  and  so  on.  Then,  with  a  common  punch  the  drawer 
will  indicate  the  amount  of  the  check  by  punching  the  proper  figures  in  the  various 
columns. 


1 

1 

1 

1 

2 

2 

2 

2 

3 

3 

3 

3 

4 

4 

4 

4 

5 

5 

5 

5      ! 

6 

6 

6 

6 

7 

7 

7 

7 

8 

8 

8 

8 

9 

9 

9 

9 

0 

0 

0 

0 

STOPPING  PAYMENT  ON  A  CHECK. 

A  check  may  have  been  obtained  from  the  drawer  through  duress  or  fraud,  in  this  case  the  drawer  may 
notify  the  bank  to  refuse  payment  on  the  check  when  it  is  presented  and  the  bank  will  be  bound  thereby.  Only 
the  drawer  of  a  check  and  not  a  subsequent  holder  can  stop  payment.  If  you  are  the  holder  of  a  che~k  and  lose 
it,  find  the  drawer  if  possible  and  get  him  to  notify  the  bank. 


CERTIFIED  CHECKS. 

The  holder  of  a  check  may  take  it  to  the  bank  on  which  it  is  drawn  and  have  it  "certified"  as  being  good. 
The  bank  does  this  by  stamping  something  like  the  following  across  its  face: 


Certified  Check. 


QflCAGOjLL 


/ 


M2JLJ89t£  JPJ&A 


JJhYtothec 


DttnSros  BB.ifCo  nv-*» 


'LLARS. 


The  bank  immediately  deducts  the  amount  of  the  check  from  the  drawer's  account  so  that  he  cannot  with- 
draw his  entire  funds  from  the  bank  and  leave  nothing  with  which  to  meet  this  check.  There  are  many  reasons 
why  it  is  desirable  to  have  checks  certified.  A  bank  holds  for  collection  your  note.  They  will  not  give  up  the 
note  until  payment  has  been  made  in  a  form  that  is  satisfactory.  There  may  be  so  far  as  this  bank  knows  no 
funds  in  your  bank  with  which  to  meet  your  check.  Have  your  check  certified  and  the  check  is  then  accepted 
and  your  cancelled  note  is  returned  to  you  without  hesitation.  Or  you  receive  a  check  for  $15000  on  a  bank  other 
than  yours.  You  want  to  use  a  large  part  of  this  check  at  once.  Your  bank  would  not  feel  satisfied  to  have  you 
deposit  the  check  and  immediately  draw  against  it  to  the  amount  of  say  $10000  before  it  had  had  time  to  ascertain 
whether  the  check  were  good  or  not.     If  the  check  were  certified  it  would  have  no  hesitation  in  doing  so. 


10 


HOW   BUSINESS   IS   DONE. 


CERTIFICATE  OF  DEPOSIT.- 

One  form  of  voucher  given  by  a  bank  to  a  depositor  is  a  certificate  of  deposit.  It  is  not  adapted  to  an 
account  that  fluctuates  daily  for  an  account  so  evidenced  cannot  be  checked  against  but  when  money  is  to  be 
drawn  the  certificate  must  be  taken  to  the  bank  and  either  an  indorsement  of  the  payment  made  on  it  or  as  is 
more  commonly  done  the  old  certificate  is  taken  up  and  a  new  one  issued  for  the  smaller  amount.  A  certificate 
01  deposit  is  negotiable  and  may  be  used  the  same  as  a  bank  draft.  Some  banks  pay  a  low  rate  of  interest  on 
tttoney  that  is  left  with  them  for  a  certain  length  of  time. 


Certificate  of  Deposit. 


>*-^&&-M^ 


Or  STORM  LAKE. 


1111     4s,^^/Arf£/s»M/sJ^^*~J~^ 


s(?M//i 


*J-4^4&Mr, 


bW-g»^fr&rre^ 


^i  NOT  SUBJECT  TO  CHECK 

pH&>-  No  interest  after  maturity. 


*Z*XJ!*^S 


,ji6ac62j&>ts 


DO   NOT. 

Never  try  to  hand  in  your  deposit  before  those  in  advance  of  you,  but  wait  patiently  your  turn. 

Do  not  draw  a  check  unless  you  have  the  money  in  bank  or  in  your  possession  to  deposit.  Don't  test  the 
courage  or  generosity  of  your  bank  by  presenting,  or  allowing  to  be  presented,  your  check  for  a  larger  sum  than 
your  balance. 

Do  not  draw  a  check  and  send  it  to  a  person  out  of  the  city,  expecting  to  make  it  good  before  it  can  possibly 
get  back.     Sometimes  telegraphic  advice  is  asked  about  such  checks.     Always  consider  a  check  paid  when  issued. 

Do  not  exchange  checks  with  anybody.  It  is  is  soon  discovered  by  your  bank.  It  discredits  you.  It  is 
called  kiting. 

Do  not  give  your  check  to  a  stranger.  This  is  an  open  door  for  fraud,  and  if  your  bank  loses  through  you 
it  will  not  feel  kindly  to  you. 

Do  not  leave  your  check  book  exposed  to  the  view  of  strangers.     Such  carelessness  has  led  to  forgery. 

Never  attempt  to  pay  a  note  with  an  uncertified  check. 

Do  not  commit  the  folly  of  supposing  that  because  you  trust  the  bank  with  your  money,  the  bank  ought  to 
trust  you  by  paying  your  overdrafts. 

Do  not  attempt  to  palm  off  an  exaggerated  story  on  your  banker  as  to  your  assets  and  business.  Your 
account  will  tell  the  true  story. 

Don't  quarrel  with  your  bank.  If  you  are  not  treated  well  go  somewhere  else.  Don't  think  it  unreason- 
able if  your  bank  declines  to  discount  an  accommodation  note. 

If  you  want  an  accommodation  note  discounted  tell  your  bank  frankly  that  it  is  not,  in  their  definition,  a 
business  note. 

If  you  take  a  note  from  a  debtor,  with  au  agreement,  verbal  or  written,  that  it  is  to  be  renewed  in  whole  or 
part,  and  if  you  get  that  note  discounted  and  then  ask  to  have  a  new  one  discounted  to  take  up  the  old  one,  tell 
your  bank  all  about  it. 

Don't  commit  the  folly  of  saying  that  you  will  guarantee  the  payment  of  a  note  which  you  have  already 
endorsed. 

When  you  have  paper  for  collection  which  is  payable  abroad,  deposit  it  in  sufficient  time  for  proper  entry 
and  transmission  to  the  place  where  it  is  due. 


HOW   BUSINESS    IS    DONE. 


U 


TO   BUY   A   BANK   DRAFT. 

When  you  wish  to  purchase  a  bank  draft  on,  for  instance,  New  York,  fill  out  a  requisition  on  a  blank  whicu 
will  be  furs.shed  you  by  the  bank.     This  will  be  something  like  the  following  : 

Requisition  for  Bank  Draft. 
UNION    TRUSTCDMPANY. 

Draft  Wanted  on  Ntfw/rork,  order  of 


It  is  in  most  cases  preferable  to  have  the  draft  drawn  to  your  own  order  and  then  endorse  it  to  the  party  to 
whom  you  wish  to  send  it,  for  it  will  then  serve  as  a  receipt.  Such  drafts  are  periodically  returned  to  the  bank 
drawing  them,  and  you  can  call  there  and  examine  it  for  its  endorsements. 


Bank  Draft. 
>oooooooooooooooooooaooooooooooooooooooo«oooooooBOOt 


ENDORSEMENTS. 

• 

It  is  important  that  the  business  man  should  know  what  form  of  endorsement  to  use  in  a  given  case. 

When  sending  a  negotiable  paper  requiring  an  endorsement  through  the  mail  a  full  endorsement  is  to  be 

preferred  to  a  blank  one.     If  you  expect  to  har/H  the  paper  over  to  some  person  a  blank  endorsement  will  do. 

If  you  are  depositing  it  in  a  bank,  the  usual  form  is  : 

(New  form). 

For  Deposit  ( As  this  is  a  form  in  daily  Pay  to 

ln   tlie  use,  most  firms  have  a  rubber  UNION    TRUST    CO. 

HOME  NATIONAL   BANK  stamp  made  for  it.    It  is  then  ~,.  T11 

for   credit  of  the  work  of  but  a  moment  to  t_mcagO,  111. 

i  c        \  make  the  endorsement.)  or  ormkb 

(your  name  or  firm).  or  order 

O.  M.  POWERS. 
If  it  is  a  note  or  draft  which  you  wish  the  bank  to  collect  endorse  as  follows: 


Pay  to 

Corn  Exchange  Bank 

or  order 

For  Collection. 

(Your  name. ) 


This  does  not  transfer  the  title  to  the  paper,  but  o  lly  gives  power  to  collect  it. 


12 


HOW  BUSINESS  IS  DONE. 


'  The  purport  of  the  late  decisions  of  the  Courts  is  that  when  a  draft  or 
check  is  endorsed  for  collection  or  for  account  of,  the  form  of  endorsement 
carries  notice  that  the  party  collecting  is  a  mere  agent  of  the  endorser  to 
collect,  hence  the  agent  is  under  no  liability  to  repay  the  amount  collected 
after  he  has  paid  the  same  over  to  his  principal. 

The  members  of  the  Chicago  Clearing  House  Association  have  unani- 
mously agreed  that  "on  and  after  July  1st,  1896,  members  of  this  Association 
shall  not  send  through  the  Clearing  House  exchanges  any  checks,  drafts, 
notes,  bills  of  exchange,  or  other  items  having  thereon  such  endorsements  as 
'for  collection,'  or  'for  account  of,'  or  any  other  qualified  or  restrictive 
endorsement,  but  that  all  endorsements  shall  be  in  the  following  form: 

'  Pay  to  Chicago  National  Bank,  Chicago,  or  order,' 
or  endorsed  in  blank,  stamped  or  signed  in  the  usual  manner." 

{Extract  from  circular  letter  issued  by  members  of  Chicago  Clearing 
House  to  their  customers.) 

From  the  above  it  will  be  seen  that  in  Chicago  paper  depos- 
ited must  bear  a  full  endorsement  instead  of  the  restrictive  ones  in 
use  heretofore.  The  fact  that  the  Clearing  house  rules  require  this 
of  their  members  will  naturally  compel  country  banks  to  do  the 
same,  especially  on  bank  drafts. 

An  endorser  may  relieve  himself  from  a  portion  of  his  liabil- 
ity in  making  an  endorsement  by  adding  to  the  endorsement  the 
words  "  without  recourse;"  as: 

Pay  to  L.  Mitchell  « 

without  recourse  to  me. 
Chas.  Brown. 

Sign  your  name  hi  an  endorsement  in  the  same  form  as  it 
appears  on  the  face.  If  "  P.  Smith,"  write  "  P.  Smith;"  if  "Jas. 
C.  Smith,"  write  "Jas.  C.  Smith."     If  erroneously  spelled  or  not 

written    as  you    write  it 
Endorsement  of  Payment.  on  the  face  endorse  both 

ways,  first  as  it  is  already 
spelled  or  written,  then 
as  it  should  be. 

If  you  receive  a  paper 
with  a  blank  endorsement 
on  it  you  have  the  right 
to  insert  above  the  name 
the  words  necessary  to 
change  it  to  an  endorse- 
ment in  full,  and  this  it 
would  be  prudent  to  do  if 
you  expect  to  retain  it  for 
a  time. 

Never  endorse  a  paper 
until  you  are  ready  to 
use  it. 

In     makinsj     endorse- 


Endorsements. 


uRzaJ  j6 yyvwJk/' 
l^iwp^itanBiisme^s^/Ieje, 

for  one  alcarierk  Zlcillo?z^, 

FOR  DEPOSIT 

to-rfie  cred.it  of  the 

METI\OPOLlTANDUSIr/ESsCoaECE7 


ments  write  across  the  back,  not  lengthwise.  The  left  hand  side  will  be 
the  upper  end  of  the  back.  When  a  partial  payment  is  made  on  a  note 
an  endorsement  of  the  payment  should  be  made  on  the  back,  and  should 
state  the  date  and  amount  of  the  payment. 

If  the  instrument  is  i  self  negotiable  the  endorsement  need  not  con- 
tain the  negotiable  words  "or  order,"  or  "or  bearer,"  for  these  will  be 
understood.  Thus:  "Pay  to  M.  Foster —J.  B.  Lyons"  is  a  full 
endorsement,  and  not  a  restrictive  one. 

GUARANTEEING  OTHERS'   PAPER. 

Avoid  endorsing  or  guaranteeing  paper  for  others.  Many  a  one  has 
been  financially  ruined  by  being  suddenly  called  upon  to  pay  an  obliga- 
tion thus  incurred.  It  is  a  course  of  action  that  under  no  circumstances 
promises  any  return,  and  you  run  many  chances  of  suffering  a  loss 
thereby.     What  you  will  not  do  yourself  you  cannot  consistently  ask 


HOW   BUSINESS   IS  DONE. 


13 


another  to  do.  Therefore  do  not  ask  another  to  endorse  or  guarantee  your  paper,  for  he  will  then  have  a  claim 
on  you  for  a  like  favor.  So  careful  is  the  man  of  good  business  judgment  to  avoid  the  possible,  yet  probable, 
consequences  of  guaranteeing  paper  for  others  that  it  is  often  a  provision  in  an  agreement  of  copartnership  that 
neither  party  shall  endorse  in  his  own  name  the  paper  of  another  and  thereby  indirectly  endanger  the  solvency 
of  the  firm. 

Politely,  but  nevertheless  firmly,  refuse. 

Neither  is  the  practice  of  exchanging  notes  to  be  advised  altogether,  though  it  is  often  done  by  good 
business  men  and  proves  to  be  an  accommodation  to  both  parties  concerned. 


COLLATERAL   NOTES. 

One  of  the  chief  sources  of  profit  to  a  bank  is  the  loaning  of,  not  alone  its  own  capital,  but  a  portion  of  that 
which  is  left  on  deposit  with  them.  These  funds  they  will  loan  on  approved  security.  Short  time  loans  are 
preferred,  because  they  enable  the  bank  to  turn  its  money  often,  and  in  case  of  necessity  they  are  more  readily 
converted  into  cash.  If  one  has  valuable  stocks  or  bonds  or  ordinary  promissory  notes,  but  no  cash,  he  can  use 
them  as  "collaterals"  at  his  bank.  He  will  endorse  his  collaterals  over  to  the  bauk,  and  make  out  and  sign  a 
collateral  note  on  the  face  of  which  his  collaterals  are  listed.  Of  course,  the  nominal  value  of  the  collateral  will 
far  exceed  the  amount  of  his  loan,  for  on  a  forced  sale  they  would  not  probably  sell  for  par.  If  the  note  be  paid 
the  collaterals  will  of  course  be  returned,  and  the  endorsements  can  be  stricken  off. 


Collateral  Note. 


Chicago,  III., 

..<£&3!!ZkZ^t£Z... after  dale V^-^ 

Union  Trust  Company 


/JslA'&J? 


■promise  to  pay  to  the  order  of 


DOLLARS. 


for  value  Received,  with  interest  at  the  rate  of  7  per  cent  per  annum,,  after  maturity  until  paid. 


V  -^ i 


have  transferred  and  delivered  to  said  Union  Trust  Company,  as  Collateral  security,  for  the  payment  of  this  and  of 
any  other  liabilities  of  the  undersigned  to  said  payee,  due  or  to  became  due,  or  that  may  hereafter  be  contracted,  the  following  property. 


value  of  which  is 

viZ; o<>:^z-^^^  ££^Zi^^^ 

Tp^i^cX^Z   /.f^f..£..^£rr    ^/?<?^.^ 

-2^ .s^^^7^^^^^^^?^:. 


Dollars, 


'_r<^-^^ 


And  the  umlersigned  hereby  give  the  said  payee  and  assigtis  authority  to  sell  the  said  property,  or  any  part  thereof  or  any  substitutes 
therefor,  and  all  additions  thereto,  on  the  maturity  of  the  above  note,  or  any  lime  thereafter,  or  before,  in  the  event  of  the  said  security 
depreciating  in  value,  at  any  public  or  private  sale,  without  advertising  the  same,  or  demanding  payment  or  giving  notice,  with  the  right 
to  said  payee  and  assigns  themselves  to  be  the  purchasers,  when  sale  is  made  at  any  brokers'  board  or  public  sale.  And  after  deducting 
all  costs  and  expenses,  to  apply  the  residue  to  the  payment  of  any.  eitlier  or  all  liabilities  as  aforesaid,  as  said  payee  or  assigns  shall  elect 
returning  the  overplus  to  the  undersigned;  and  in  case  the  proceeds  of  the  sale'of  said  property  shall  not  cover  the  principal,  interest  and 
expenses,  the  undersigned  engages  to  pay  the  deficiency  forthwith  after  such  sale,  with  legal  inlercp 


14 


HOW  BUSINESS  IS   DONE. 


JUDGMENT    NOTES. 

A  judgment  note  is  an  ordinary  note  to  which  is  added  a  power  of  attorney,  authorizing  the  holder  to  confess 
a  judgment  for  the  amount  thereof  when  due,  and  in  favor  of  the  holder.  In  this  way  a  man  may  have  ajudg- 
ment  rendered  against  without  knowing  anything  about  it.  Indeed  the  first  he  might  learn  of  the  judgment  would 
be  when  the  sheriff  enters  to  make  a  levy  on  his  goods.  It  will  thus  be  seen  to  be  a  very  severe  contract,  and  the 
prudent  business  man  will  avoid,  if  possible,  making  such  a  coutract.     They  are  not  legal  in  some  states. 

It  also  provides  for  pavment  of  attorney  fees  in  case  suit  is  brought  for  its  collection.  Many  such  notes 
waive  the  exemption  of  homestead. 

Form  oe  Judgment  Note. 


Dollars, 
Payable  al„„.. 

Value received  ulith  interest  at.  ..Z^^......per  cent.  pe/annumMjter....~r^^^rr^r^Z:. until  paid  (.and  Twenty-five  Dollar*  additional  as  Attorney's  fees.)    Pro- 
vided, however,  that  if  this  note  is  paid  without  Suit  or  Judgment,  men  no  Attorney' s  fees  are  to  be  paid. 

NOW.  THEREFORE,  f  n  consideration  of  the  premises  Q7    do  hereby  make,  constitute  and  appoint  JOHN  D.  ODELL,.or  any  Attorney  of  any  Court  of  Record, 
bo^*&&;tr 


of  the  States  or  Ter 


>  and  lawful  Attorney,  irrevocably,  forxJSft^-a'iid  iiu^yname,  place  and  stead  to  appear  in  any  Court  of  Record,  in  term  time  or  vacation,  In  any 
3r  Territories  of  tbe  United  States  at  apy  time  before  or  arterahe  said  note  becomes  due,  to  waive  the  service  of  process  and  confess  a  judgment  In  favor  of 

the  said, C_~7Vx^i^..../?Zi<2*lK*c^.....  or_*asi^assigns,  upon  said  Note  for  the  sum  above,  and  interest  thereon  to  the  day  of  the  entry  of  the  said  Judgment, 

together  with  cosrs  and  damages,  and  also  said  Attorney's  fees;  and  also,  to  file  a  cognovit  for  the  amount  thereof,  with  an  agreement  therein  that  no  writ  of  error  or 
appeal  shall  be  prosecuted  upon  the  Judgment  entered  liy  virtue  hereof,  nor  any  bill  in  equity  filecLt»-rntetfe*e-inany  manner  with  the  operation  of  said  judgment  and  to 
release  all  errors  that  may  intervene  in  entering-uusiuS  Judgment  or  issuing  any  execution  thereon;  anrtTjlso  to  consent  to  Immediate  execution  on  said  judgment;  also 

to  waive  all  benefit  or  advantage  to  which X_2_£. may  be  entitled  by  virtnarof  anj/Honiestead  or  other/exemption  law^-and  all  laws  authorizing  the 

redemption  of  lands  after  sale  under  execution,  now  or  hereafter  in  force,  in  this  or  any  State/>r  Tecritorv'of  tbejjniteo^tayjes^vbej^tfagirrw^  may  be  entered  by  virtue 
hereof;  hereby  ratifying  and  confirming  all  that s^Z&fty.. said  attorney  may  do;  by  v/rtue^fereof^ 


[SEAL.] 

[seal.] 


ACCEPTANCE. 

A  draft  drawn  for  a  certain  time  after  sight,  and  in  some  states  a  sight  draft  must  be  presented  promptly 
for  acceptance.     The  drawer  signifies  his  acceptance  of  a  draft  by  a  memorandum  written  across  the  face  of  the 

draft,  as  follows  : 

•  Accepted. 

July  81,  1896. 
C.  R.  DuTTON. 

If  he  wishes  to  make  the  draft  payable  at  a  certain  place,  as  at  his  office  or  at  his  home,  he  should  so 
indicate  in  his  acceptance. 

Making  a  draft  payable  at  your  bank,  as  is  the  one  on  page  15,  has  the  effect  of  making  it  your  check  upon 
it.  They  will  pav  it  on  presentation  when  due.  While  this  is  not  an  uncommon  thing,  yet  it  is  not  considered  as 
good  a  practice  as  giving  your  check  for  your  acceptance.  • 

Draft. 


Jo 


@AA^-, 


&*-rt-J 


ff^A  a^rjp. 


how  business  is  done. 
The  Same  Draft  After  Being  Accepted. 


15 


Q^A^rJMA 


73S> 


HOW  COLLECTIONS  ARE  MADE  BY  DRAFT. 

One  of  the  most  common  methods  of  collecting  a  delinquent  account  is  by  means  of  the  draft.  A  owes 
you  an  account  now  past  due  and  has  paid  no  attention  to  your  monthly  statements  nor  to  your  polite  dunning 
letters.  In  your  last  letter  you  probably  stated  that  if  you  did  not  receive  his  remittance  by  a  certain  date  you 
would  feel  at  liberty  to  draw  on  him  for  the  amount  of  his  account.  On  the  date  mentioned  you  have  not  heard 
from  him.  Draw  your  draft  on  him  in  your  own  favor  and  for  the  amount  of  the  account.  Make  the  draft  "at 
sight"  or  "at  three  days'  sight"  or  for  any  other  time  you  may  deem  best.  Endorse  it  "For  Collection"  to  a  bank 
doing  business  as  near  to  your  debtor  as  possible  and  enclose  it  in  a  letter  of  instructions  to  the  bank  who  will 
present  it  for  you  and  endeavor  to  secure  its  collection.  Instruct  the  bank  in  such  case  not  to  protest  the  draft  in 
case  of  non- payment  for  nothing  would  be  gained  thereby.  This  instruction  is  usually  conveyed  by  means  of 
the  words  "Do  not  Protest,  take  this  off  before  presenting"  printed  on  the  end  of  the  draft.  If  the  draft  be  paid 
the  bank  will  deduct  only  a  small  fee,  usually  only  large  enough  to  cover  postage  and  cost  of  the  bank  draft  they 
must  use  in  remitting  the  proceeds.  If  your  debtor  does  not  accept  or  pay  the  draft  it  will  be  returned  to  you  by 
the  bank  with  a  memorandum  stating  the  reason  if  any  given  by  the  debtor  for  his  refusal  to  accept  or  pay.  To 
continually  or  repeatedly  refuse  payment  of  drafts  leaves  one  open  to  the  suspicion  that  he  is  financially  embar- 
rassed or  captious  in  his  dealings  with  others;  either  one  of  which  soon  brings  him  into  disrepute  with  his  banker 
whose  good  opinion  he  should  covet  and  cultivate.  If  then  there  is  no  especial  reason  why  he  should  not  pay  the 
draft  he  will  be  apt  to  do  so. 

If  you  wish,  instead  of  sending  this  draft  yourself,  you  can  endorse  it  to  your  own  bank  for  collection  who 
will  attend  to  forwarding  it. 

In  most  cases  a  debt  is  due  at  the  office  of  the  creditor  and  all  costs  of  getting  payment  to  the  creditor 
should  be  borne  by  the  debtor.  Drawing  the  draft  as  we  have  described  throws  the  cost  of  transmission  on  the 
creditor  for  the  bank  deducts  its  fee  from  his  proceeds.  To  avoid  this  and  place  the  burden  where  it  properly 
belongs,  add  in  the  draft,  in  connection  with  the  amount,  the  words  "with  exchange"  then  the  bank  will  collect 
the  face  of  the  draft  and  in  addition  its  fees. 

When  the  draft  fails  of  its  mission  the  account  may  be  placed  in  the  hands  of  an  attorney  or  of  a  collection 
agency  according  to  the  emergency  of  the  case. 


HOW  TO  DRAW  THROUGH  A  CERTAIN  BANK. 

Sometimes  an  order  is  given  for  goods  with  instructions  to  draw  "at  sight"  or  for  a  certain  time  and  through 
a  certain  (his)  bank  for  the  amount  of  the  bill.  In  this  case  the  debtor  will  not  remit  but  thereby  notifies  you 
that  he  will  await  your  draft.  The  object  in  instructing  you  to  draw  through  his  bank  is  that  all  his  business  may 
come  through  the  one  bank  and  he  may  leave  instructions  there  to  pay  it  when  presented  or  due  and  to  deduct  it 
from  his  account  retaining  the  draft  as  their  voucher.  While  such  instructions  are  common  yet  it  is  considered 
better  to  have  the  draft  presented  and  paid  by  a  check  regularly  drawn. 

In  drawing  this  draft  should  you  endorse  it  to  your  bank  and  have  them  forward  it  for  collection  they 
might  send  it  to  any  bank  in  the  place  where  the  debtor  resides,  so,  to  follow  the  instructions  of  the  debtor  you 
must  draw  the  draft  in  your  own  favor  and  then  endorse  it  "for  collection"  to  the  bank  named  in  his  advice  and 
forward  it  to  them  directly.  Or  draw  the  draft  in  favor  of  the  bank  named  and  send  it  to  them  direct. 


16  HOW  BUSINESS  IS  DONE. 

HOW  TO  REMIT  MONEY. 

Let  it  be  emphatically  stated  again  that  it  is  the  duty  of  the  debtor,  unless  the  contrary  be  expressly  agreed 
upon,  to  lay  down  the  full  amount  of  his  debt  at  the  creditor's  place  of  business  free  from  discount,  exchange,  or 
deduction  of  any  sort.  In  all  cases  then  the  remittance,  no  matter  in  what  form  it  may  be  made,  should  be  in  a 
form  or  in  funds  that  are  current  and  without  discount  or  exchange  in  the  creditor's  place  of  business. 

The  risk  of  loss  incidental  to  remitting  in  any  form  rests  with  the  debtor  unless  the  creditor  has  instructed 
him  to  remit  in  a  certain  manner,  then  if  his  instructions  be  followed  strictly  the  loss  is  on  the  creditor. 

I.— IN  STAMPS. 

Stamps  are  not  legal  tender  and  should  never  be  sent  except  the  amount  be  very  small  or  the  creditor  has 
instructed  you  to  remit  in  that  manner. 

II.— IN  CURRENCY  OR  COIN  BY  MAIL. 

This  is  a  proper  form  in  which  to  remit,  but  it  is  not  safe  and  the  government  does  not  guarantee  the  safe 
delivery  of  any  letter  br  package  delivered  to  it  for  transmission.  Should  it  be  lost  the  loss  would  be  yours  and 
not  the  creditors,  unless  the  creditor  had  instructed  you  to  remit  in  that  manner,  when  the  loss  would  be  his. 

III.— BY  REGISTERED  LETTER. 

This  is  a  legitimate  form  of  remittance  and  comparatively  safe.  Though  the  government  does  not  guaran- 
tee its  safe  delivery,  it  takes  every  precaution  to  protect  it,  and  of  the  thousands  of  remittances  so  made  in  a  year 
but  a  small  proportion  are  lost.  The  loss,  if  any,  falls  of  course  on  the  debtor.  The  registered  remittance» 
doubtless,  finds  most  favor  in  localities  where  other  and  simpler  forms  of  remittances  cannot  be  had.  The 
receipt  which  the  receiver  must  sign  and  which  is  returned  to  the  sender  also  commends  it  in  many  cases.  The 
fee  for  registering  is  eight  cents  in  addition  to  the  postage.     Packages  may  also  be  registered. 

IV.— PERSONAL  CHECK. 

It  is  perfectly  proper  to  send  your  personal  check  to  a  creditor  residing  in  the  same  town  or  to  a  place 
where  the  banks  are  in  daily  correspondence  and  exchange  with  your  bank  but  not  otherwise,  for  in  that  case  such 
a  check  is  subject  to  a  fee  for  collection.  A  check  on  a  Metropolitan  bank  may  properly  be  sent  farther  than  on 
a  small  bank.  Thus  a  check  on  a  Chicago  or  New  York  bank  may  be  sent  to  any  town  where  the  bank  is  a 
depositor  with  the  Chicago  or  New  York  bank,  and  will  pass  at  par  at  the  bank  while  a  check  on  that  bank 
would  not  pass  at  par  in  the  Chicago  or  New  York  bank.     See  pages  8  and  17. 

It  is  not  presumed  that  personal  checks  are  drawn  for  circulation  but  for  presentation  and  payment ;  so  as  a 
rule  they  should  not  be  used  for  that  purpose  unless  they  are  drawn  for  enough  more  than  the  debt  to  pay  the 
cost  of  collection. 

One  of  the  most  annoying  incidents  of  the  wholesale  business  is  to  have  a  customer,  residing  say  two  or 
three  hundred  miles  away  remit  his  check  to  balance  his  account.  Nothing  so  quickly  stamps  a  man  as  either 
ignorant  of  the  ways  of  business  or  as  intentionally  endeavoring  to  take  a  mean  and  small  advantage  as  this. 
The  receiver  may  accept  the  check  in  full  satisfaction,  pocket  his  loss  and  swallow  his  chagrin,  but  rest  assured 
the  remitter  has  gained  nothing  in  the  end. 

V.— PERSONAL  DRAFT. 

A  personal  draft  on  a  third  person  whether  accepted  or  not  is  not  a  legal  tender  and  is  not  a  proper  form  of 
remittance.     It  should  never  be  sent  except  by  previous  arrangement. 

VI.— BANK  DRAFT. 

This  is  doubtless  the  most  common  and  the  best  form  in  which  to  make  ordinary  remittances,  but  not  even 
all  bank  drafts  will  pass  without  discount  in  all  places.  A  bank  draft  on  Chicago  or  New  York  would  probably 
so  pass  anywhere  in  the  United  States,  and  for  that  reason  they  are  to  be  preferred.  A  bank  draft  on  San 
Francisco  would  probably  not  pass  in  Pittsburg  without  discount.  A  fee  is  usually  charged  by  the  bank  for  its 
trouble  regardless  of  the  course  of  exchange  ;  what  this  fee  is  depends  on  the  banks. 

VII.— CERTIFICATE  OF  DEPOSIT. 

It  cannot  be  said  that  either  this  instrument  or  Cashier's  Check  is  in  common  use  as  a  means  of  remittance, 
but  both  being  negotiable  instruments  they  are  frequently  called  upon  for  this  duty.  All  that  has  been  said  in 
reference  to  Bank  Drafts  applies  equally  to  them. 


HOW   BUSINESS   IS   DONE. 


17 


VIII.— POSTAL  ORDER. 

This  is  a  safe  and  convenient  method,  but  cannot  be  used  for  amounts  exceeding  $100.00,  unless  more  than 
one  order  be  purchased.  They  can  be  transferred  once  and  may  be  deposited  in  your  bank  along  with  other 
instruments.  The  bank  will  require  you  to  sign  the  order  as  if  you  had  received  the  money  from  the  P.  O. 
instead  of  indorsing  it  to  them.  They  should  not  be  sent  except  to  the  town  where  they  are  made  payable  for 
they  are  drawn  on  a  particular  office.     But  one  endorsement  is  permitted. 

IX.— EXPRESS  ORDERS. 

These  are  growing  rapidly  in  popularity.  They  are  cheap  and  reliable  for  the  express  company  guarantees 
their  payment.  They  may  be  deposited  the  same  and  in  the  same  manner  as  a  postal  order.  The  maximum 
amount  that  can  be  so  sent  in  one  order  is  $50.00.  Unlike  Postal  Orders,  they  can  be  sent  anywhere  and  then 
re-sent,  for  they  are  not  drawn  on  a  particular  office. 

X.— EXPRESS. 

This  method  providing  for  the  transfer  of  the  actual  money  is  of  course  proper  in  any  amount  though  it 
may  prove  somewhat  expensive. 

XI.— BY  TELEGRAPH. 

This  may  be  done  either  through  the  express  companies  or  through  the  Western  Union  Telegraph  Co.  If 
through  an  express  company,  the  money  is  paid  to  an  agent  who  telegraphs  the  order  to  an  agent  at  the  point  to 
which  remittance  is  to  be  made.  This  method  is  only  applicable  to  large  cities  and  towns,  for  not  every  express 
or  telegraph  office  would  have  at  all  times  sufficient  funds  to  meet  these  orders  on  demand.  The  charges  by  the 
express  companies  are  in  addition  to  cost  of  telegraph  service: 

$100.00  or  less,  1  %. 

Over  $100  to  $200 $1  25 

"      200"     300 150  No  charge  less  than  50  cents. 

"      300  "    400 1  75 

"      400   "     500 2  00 

SUBURBAN  BANKS. 

Many  of  the  depositors  in  banks  adjacent  to  large  cities  have  occasion  to  use  their  checks  in  paying  bills  in 
the  city.  These  checks  naturally  find  their  way  into  the  banks  of  the  city,  but  being  personal  checks  on  banks 
not  members  of  the  clearing  house  they  are  subject  to  a  collection  fee.  To  avoid  this  the  suburban  bank  arranges 
with  a  member  of  the  clearing  house  to  "clear"  its  checks  for  it.  That  is,  this  city  bank  takes  up  the  suburban 
bank's  checks  from  the  other  members  as  its  own.  Such  suburban  banks  frequently  have  a  notice  on  their  checks 
that  they  are  also  payable  through  the  clearing  house  at  a  certain  bank. 


Check  of  a  Suburban  Bank. 


J3ANK0FflENHYL.  GlOS, 


PAYTc 


PAYABl^H  ROUGH 

the  ch/ca  gctclear/ng  house-    ' 
atNat/ohal  Bank  of  Amer/ca 


*  »/.••.<  vi  1 1  ttrm  rv.TAji 


DRAWING  CASH  ON  YOUR  OWN  CHECK. 

If  you  would  draw  money  from  your  bank  account  for  your  personal  use  write  the  check  "Pay  to  the  order 
of  Currency."     If  you  draw  it  "  Pay  to  the  order  of  Myself,"  you  will  be  obliged  to  endorse  it. 


1?  HOW  BUSINESS  IS  DONE. 

KITING. 

This  is  a  technical  term  made  use  of  by  bankers  to  describe  a  sort  of  pirating  practiced  by  some  depositors. 
To  illustrate  :  Suppose  that  the  clearing  house  meets  at  11  A.  M.  At  12  M.  a  depositor  is  in  need  of  cash,  but 
has  none  in  bank.  He  goes  to  a  friend  and  exchanges  checks  with  him.  The  check  received  he  endorses  and 
pays  over  to  his  customer.  His  check  may  be  deposited  at  once  or  next  morning  in  his  friend's  bank.  This 
bank  will  pass  it  through  the  clearing  house  and  it  will  reach  the  bank  on  which  it  is  drawn  twentv-four  hours 
after  it  was  issued.  By  this  time  the  drawer  has  been  able  to  make  a  deposit  sufficient  to  cover  the  check.  He 
has  thus  been  able  to  secure  the  use  of  this  money  without  charge  for  twenty  four  hours. 

It  is  considered  bad  practice  by  bankers,  and  the  account  of  a  depositor  guilty  of  it  is  watched  with  care. 

VALUE  RECEIVED. 

The  words  "value  received"  are  not  necessary  to  the  validity  of  a  note  or  draft,  it  is  presumed  that 
value  was  given  whether  so  stated  or  not. 

JOINT  NOTE. 

Notes  are  either  joint,  or  joint  and  several.  A  note  written,  "We  promise  to  pay,"  and  signed  by  two 
people  is  a  joint  note.     If  "  I  promise  to  pay,  etc.,"  it  is  joint  and  several. 

COMPUTATION  OF  TIME. 

If  the  time  of  commercial  paper  is  stated  in  months,  calendar  mouths  are  used.  If  the  time  is  stated  in 
days,  count  actual  days. 

SAFETY  DEPOSIT  VAULTS. 

Many  banks  in  the  larger  cities  have  large  vaults  especially  constructed  and  fitted  with  safe  deposit  boxes 
or  drawers.  These  boxes  they  rent  to  persons  who  wish  to  store  valuable  papers,  jewelry  or  money.  The  rent 
of  the  boxes  depends  on  the  size.  This  is  a  great  convenience  to  those  who  have  no  secure  place  for  valuables. 
The  vaults  are  carefully  guarded  and  many  vaults  are  provided  with  private  rooms  where  a  t>erson  may  exam- 
ine his  securities  or  valuables  at  pleasure. 

LEGAL  TENDER. 

A  may  owe  B  a  sum  of  money  which  draws  interest  and  which  is  due,  but  B  knowing'  A  to  be  perfectly 
responsible,  prefers  to  have  him  keep  the  money  and  pay  the  interest.     A  wishes  to  pay  and  stop  the  interest. 
He  should  therefore  make  a  legal  tender  or  offer  of  the  money  to  B.     Only  certain  kinds  of  money  can  be  used 
for  this  purpose.     Such  money  is  called  "  legal  tender. "     When  making  a  tender  to  free  oneself  from  payment 
of  further  interest  and  costs,  he  must  offer  certain  kinds  of  money.     These  are  : 
I.     Gold  coin  and  silver  dollars  in  any  amount. 
II.     Silver  coins  smaller  than  one  dollar  in  amounts  not  exceeding  ten  dollars. 
III.     Copper  and  nickel  coins  up  to  twenty-five  cents. 

IV.     Greenbacks  for  any  amount  and  for  any  debt  except  duties  and  interest  on  the  public  debt. 
V.     Treasury  notes  in  any  amount. 
National  bank  notes,  silver  and  gold  certificates,  are  not  legal  tender  when  objected  to. 

When  a  tender  is  legally  made  it  stops  further  interest,  and  in  case  suit  is  brought  on  it  the  costs  will  be  on 
the  creditor. 

ADVANTAGES  OF  TAKING  A  NOTE. 

There  are  a  number  of  advantages  in  having  an  obligation  in  the  form  of  a  promissory  note  rather  than  in 
an  account.  The  note  cannot  be  so  easily  disputed.  It  can  be  more  readily  negotiated  or  used  as  a  collateral  on 
which  to  raise  money.  It  can  also  be  more  easily  enforced  in  a  suit  of  law.  The  accuracy  of  an  account  must 
be  verified  by  oath,  while  a  note  is  prima  facie  evidence  of  its  own  veracity.  It  is  also  a  fact  that  a  debtor  is  more 
likely  to  pay  his  note  than  his  account,  for  the  note  may  be  protested  and  his  credit  thereby  be  impaired.  Of 
course  if  a  creditor  accepts  a  note  he  thereby  postpones  the  collection  until  the  note  matures  ;  in  this  respect  the 
note  might  be  a  disadvantage. 

NATIONAL  BANKS. 

These  are  corporations  organized  by  act  of  congress,  hence  are  all  called  National.  They  may  if  they  wish 
purchase  U.  S.  bonds  with  their  capital,  or  a  part  of  it,  and  deposit  the  same  with  the  Treasurer  of  the  United 
States.  Against  the  bonds  so  deposited  they  may  issue  in  national  bank  notes,  not  more  than  ninety-per  cent,  of 
the  face  value  of  the  bonds.  These  banks  are  called  banks  of  issue  because  they  issue  these  notes  or  bills  which 
pass  as  money.  National  banks  are  required  to  report  under  oath  to  the  controller  of  the  currency  whenever  he 
demands  it,  their  financial  condition  in  detail.  They  are  also  visited  periodically  by  bank  examiners  who  check 
over  their  books  and  report  the  condition  to  the  controller.  National  banks  are  not  permitted  to  hold  real  estate 
except  for  bank  purposes,  and  when  taken  to  secure  a  debt.  Such  property  must,  however,  be  disposed  of  within 
five  years.     A  national  bank  is  not  permitted  to  certify  to  a  check  for  more  than  a  depositor's  account. 

National  banks  in  Albany,  Baltimore,  Boston,  Cincinnati,  Chicago,  Cleveland,  Detroit.  Louisville.  Milwaukee. 
New  Orleans,  New  York,  Philadelphia,  Pittsburg,  St.  Louis,  San  Francisco  and  Washington  are  required  to  have 
constantly  on  hand  in  lawful  money  at  least  twenty-five  per  centum  of  the  aggregate  amount  of  its  notes  in  cir- 
culation and  its  deposits.     Banks  in  other  cities  are  required  to  keep  fifteen  per  centum  on  hand. 


HOW  BUSINESS   IS   DONE.  19 

The  stock  holders  in  a  national  bank  are  held  to  a  double  liability,  that  is,  in  case  the  bank  becomes  insol- 
vent the  stock  holders  may  be  assessed  an  amount  equal  to  the  amount  of  stock  held  by  them. 

They  are  required  to  keep  at  all  times  on  deposit  with  the  treasurer  of  the  United  States  5%  of  their  circulation 
to  be  used  in  the  redemption  of  their  notes. 

Each  bank  is  required  to  set  apart  one  tenth  of  its  net  profits  until  this  sum  shall  equal  20%  of  its  capital 
stock.     This  is  designated  as  a  surplus  fund  and  is  to  be  used  to  meet  any  losses. 

To  be  eligible  as  a  director  a  stockholder  must  be  a  citizen  of  the  United  States  and  own  in  his  own  right  at 
least  ten  shares  of  the  capital  stock  which  must  not  be  pledged  in  any  way  for  a  debt.  At  least  three-fourths  of 
the  directors  must  have  resided  in  the  state  in  which  the  bank  is  located  for  a  year  or  more  immediately  preceding 
their  election  and  must  continue  their  residence  there  during  their  term  of  office. 

Each  bank  must  have  a  capital  of  at  least  $100,000,  but  if  the  population  of  the  city  where  it  is  located  be 
50,000  or  more  then  the  capital  stock  must  be  not  less  than  $200,000.  If  the  population  of  the  city  or  town  be  less 
than  6,000  a  bank  may  be  organized  with  a  capital  of  $50,000  by  securing  the  special  authority  of  the  controller  of 
the  currency. 

SAVINGS  BANKS. 

These  are  institutions  organized  not  for  the  convenience  of  the  business  man  but  for  the  benefit  of  the  poor. 
They  are  to  enable  the  latter  class  by  combining  their  nickels  and  dimes  to  aggregate  such  a  sum  that  it  can  be 
loaned  to  good  advantage. 

Savings  Banks  are  always  creatures  of  State  Statutes  and  they  must  therefore  differ  as  these  statutes  differ. 
But  two  general  plans  are  however  usually  followed  in  their  organization,  to-wit : — the  purely  mutual  and  the* 
corporate.  The  former  is  the  plan  in  general  use  throughout  the  eastern  states  and  is  undoubtedly  the  more 
rational  and  successful  plan  of  the  two.  In  most  of  the  western  states,  Illinois  included,  the  corporate  plan  is  in 
vogue. 

By  the  mutual  plan  all  net  profits  made  by  the  institution  are  at  stated  intervals  returned  to  the  depositors 
in  proportion  to  the  amount  of  their  deposits.  The  trustees  or  directors  serve  without  pay,  only  those  employees 
giving  daily  attendance  at  the  institution  receiving  any  remuneration.  The  expenses  are  reduced  to  the  minimum 
and  a  correspondingly  larger  dividend  returned  to  the  depositor.  In  those  states  where  this  is  the  plan  of  organi- 
zation the  large  amount  of  deposits  per  capita  is  evidence  of  its  popularity  with  the  masses. 

Form  of  Receipt  Used  by  a  Savings  Bank. 


j&kwatyo, 159. 

C  Received  of  DIMe  SAVINGS   BANK 


DOLLARS, 

to  be  charged  to  my  account. 


gJTo, 


From  the  fact  that  the  depositors  in  savings  banks  are  the  poor  the  state  exercises  a  supervision  over  them 
and  limits  the  nature  of  their  investments.  They  are  usually  restricted  to  mortgages  on  real  estate,  and  to  stocks 
and  bonds.  Such  security  being  the  very  best  they  do  not  afford  as  high  a  rate  of  interest.  For  this  reason  savings 
banks  are  more  noted  for  their  stability  than  for  large  profits.  It  is  a  class  of  security  that  is  not  so  readily  con- 
vertible as  that  handled  by  national  banks,  who  must  be  ready  to  produce  the  money  of  a  depositor  on  a  moment's 
notice.  The  rules  governing  a  savings  bank  usually  require  the  depositor  to  give  notice  (from  thirty  to  ninety 
days)  of  his  intentions  to  withdraw  his  deposit.  Though  advantage  is  not  usually  taken  of  this  rule,  it  serves  a 
good  purpose  in  cases  of  emergency,  when  the  bank  has  its  funds  invested  in  a  manner  that  they  are  not  readily 
convertible. 

These  institutions  bring  into  circulation  the  few  dollars  that  are  usually  hoarded  away  by  the  poor  and 
middle  classes  and  encourage  a  spirit  of  thrift  in  all  classes.  They  are  not  only  in  this  manner  indirectly  useful 
to  the  community  where  they  are  located,  but  when  the  local  municipality  is  seeking  a  subscriber  for  its  obligations 
in  the  shape  of  bonds  its  best  and  most  reliable  friends  are  the  savings  banks,  and  thus  the  people  themselves,  who 
are  the  most  interested  in  their  government,  become  more  intimately  connected  with  it  as  its  creditors. 


20  HOW  BUSINESS   IS   DONE. 

When  money  is  to  be  deposited  in  a  savings  bank  a  ticket  is  made  out  similar  to  that  in  case  of  a  commercial 
deposit. 

A  book  is  given  the  depositor  and  the  amount  of  his  deposit  entered  therein.  When  he  wishes  to  withdraw 
money  he  must  present  his  book  and  sign  a  receipt  for  the  amount  withdrawn,  which  amount  will  also  be  entered 
in  the  withdrawn  column  of  his  book. 

It  will  be  noticed  that  such  a  deposit  cannot  be  checked  against,  but  the  book  must  be  presented  either  in 
person  or  otherwise. 

TRUST  COMPANIES. 

These  companies  are  becoming  more  numerous  every  year.  They  are  state  institutions  and  not  national, 
and  are  usually  organized  under  a  special  act  referring  to  such  companies,  and  it  defines  their  limitations.  They 
receive  deposits  subject  to  check,  and  in  general  do  a  banking  business.  In  addition  to  this  they  are  authorized 
to  act  as  guardians,  administrators,  executors  and  bondsmen.  They  are  often  recognized  depositaries  of  the 
courts.  They  also  act  as  agents  for  corporations  in  selling  and  transferring  stocks  and  bonds,  and  in  the  payment 
of  dividends.     They  are  authorized  to  act  as  receivers  and  assignees  in  case  of  insolvent  debtors. 

CARE  OF  TRUST   FUNDS. 

You  are  almost  certain  sometime  in  your  business  career  to  be  called  upon  to  act  as  a  treasurer  for  a  society 
or  as  a  guardian  or  administrator,  and  the  proper  care  to  take  of  trust  funds  in  your  possession  will  concern  you. 

To  avoid  as  much  responsibility  as  possible  money  should  be  deposited  not  in  your  name,  but  in  your 

fiduciary  capacity  as  "John  Smith,  Treasurer  for ,"  or  "John  Smith,  Guardian  for ,"  as  the  case 

may  be.  This  may  not  relieve  you  from  personal  responsibility  in  case  the  bank  fails,  but  you  should  make  it  a 
rule  to  keep  trust  funds  separate  and  apart  from  your  own.  You  should  also  keep  accurate  accounts  with  the 
trust,  so  that  in  case  of  your  absence  or  death  it  would  be  an  easy  matter  to  determine  what  had  been  done. 

KINDS  OF  PAPER  MONEY. 

There  are  at  the  present  time  in  general  circulation  five  forms  of  paper  money,  viz.: 

I.     Greenbacks. 
1  II.     Treasury  Notes. 

III.  National  Bank  Bills. 

IV.  Silver  Certificates. 
V.     Gold  Certificates. 

I.— THE  GREENBACK. 

This  is  simply  a  promissory  note  of  the  Government  made  payable  to  bearer  and  its  value  is  to  be  determined  in 
the  same  manner  that  you  determine  the  value  of  an  individual's  note  ;  that  is  by  the  ability  of  the  maker  to  pay. 
There  are  now  (1896)  about  346,000,000  dollars  of  them  in  circulation.  They  are  payable  on  demand  and  do  not 
bear  interest.  A  demand  may  be  made  on  any  of  the  U.  S.  sub-treasuries.  To  provide  for  these  demands  which 
are  being  constantly  made  the  law  requires  the  Government  to  keep  on  hand  a  "Reserve"  of  $100,000,000  in  gold. 
Greenbacks  are  legal  tenders  for  all  debts  except  duties  on  imports  and  interest  on  the  public  debt.  When  they 
are  redeemed  the  law  requires  them  to  be  re-issued. 

II.— TREASURY  NOTE. 

This  was  created  by  law  in  1890.  The  words  "treasury  note"  appear  on  the  face  and  it  further  states  that 
they  are  payable  "in  coin"  without  stating  which  coin.  It  is  legal  tender  for  all  debts  both  public  and  private 
except  when  otherwise  expressly  stipulated  in  the  contract.  There  are  now  about  $129,000,000  in  circulation. 
When  redeemed  they  are  cancelled. 

III.— NATIONAL  BANK  BILLS. 

Upon  the  organization  of  a  National  Bank  it  may  invest  its  capital  in  U.  S.  Bonds  and  deposit  them  with 
the  treasurer  of  the  U.  S.  who  will  then  issue  to  the  bank  in  proper  denominations  bank  bills  to  the  amount  of  not 
more  than  90%  of  the  face  value  of  the  bonds.  The  bills  after  being  signed  by  the  officers  of  the  bank  maybe  put 
in  circulation  as  money.  The  face  of  the  bill  reads  :  National  currency.  Secured  by  United  States  bonds  de- 
posited with  the  treasurer  of  the  United  States.     The National  Bank  will  pay  the  bearer  on  demand 

- Dollars."     On  the  back  :    "This  note  is  receivable  at  par  in  all  parts  of  the  United  States  in  payment 

of  all  taxes  and  excises  and  all  other  dues  to  the  United  States  except  duties  on  imports  ;  and  also  for  all  salaries 
and  debts  owing  by  the  United  States  to  individuals,  corporations  and  associations  within  the  United  States  ex- 
cept interest  on  the  public  debt."  No  bank  bill  is  now  issued  of  a  denomination  lower  than  $5.  It  will  be 
observed  that  the  bank  bill  is  not  a  legal  tender  if  objected  to  on  that  account. 


HOW  BUSINESS  IS  DONE. 


IV.— SILVER  CERTIFICATES. 


Silver  dollars  are  heavy  and  for  this  reason  people  prefer  to  receive  payment  of  a  large  sum  in  a  more  con- 
venient form  of  currency.  To  satisfy  this  demand  and  yet  provide  a  currency  exactly  as  stable  and  valuable  as  the 
metal  itself,  the  silver  certificate  was  created.  A  person  having  silver  dollars  may  take  them  to  a  sub-treasury  and 
receive  for  them  an  equal  amount  in  silver  certificates.  The  government  retains  these  coins  in  its  vaults  to  redeem, 
when  called  upon  to  do  so,  that  same  amount  of  silver  certificates.  So  for  every  dollar  of  silver  certificates  issued 
the  government  holds  a  silver  dollar  to  redeem  it.    The  face  of  this  certificate  reads  :     "This  certifies  that  there 

have  been  deposited  in  the  Treasury  of  the  United  States silver  dollars  payable  to  the  bearer  on 

demand."  The  back  reads:  "United  States  Silver  Certificate.  This  certificate  is  receivable  for  customs,  taxes 
and  all  public  dues,  and  when  so  received  may  be  re-issued."  They  are  issued  in  denominations  of  $1,  $2,  $5  and 
upwards  to  $10,000.00.     There  are  now  about  $336,000,000  of  them  in  circulation. 

V.— GOLD  CERTIFICATES. 

These  are  similar  to  the  silver  certificates  except  that  they  are  based  on  gold  instead  of  silver.  They  are 
yellow  in  color  and  are  issued  in  denominations  of  $20  and  upwards. 

KINDS  OF  METALLIC  MONEY. 

I  —GOLD. 

The  basis  of  our  currency  is  the  gold  dollar.  This  has  23.22  grains  of  pure  gold.  The  pure  metal  is  too 
soft  to  make  a  practical  coin  so  it  is  combined  with  an  alloy  of  nine  parts  gold  to  one  part  of  alloy.  This  makes 
the  actual  weight  of  a  gold  dollar  25.8  grains.  The  gold  coins  now  issued  by  the  government  are  the  2^ -dollar, 
the  3-dollar,  the  5-dollar,  the  10-dollar  or  eagle  and  the  20-dollar  or  double  eagle.  All  our  gold  coins  are 
intrinsically  worth  their  face  and  will  pass  at  par  anywhere  in  the  world.  In  1890  the  coinage  of  1-dollar  and 
3-dollar  gold  pieces  was  discontinued  by  law. 

II.— SILVER. 

Our  silver  dollar  contains  371^  grains  of  pure  metal,  but  the  gross  weight  is  412^  grains,  owing  to  the  alloy 
that  is  added  to  the  silver  to  harden  it.  At  present  the  pure  silver  in  a  dollar  does  not  nearly  equal  the  value  of 
gold  in  a  gold  dollar.  If  the  gold  in  a  gold  dollar  be  taken  as  the  standard  the  silver  in  a  silver  dollar  is  worth 
only  about  53  cents.  For  this  reason  our  silver  dollars  will  not  pass  at  par  anywhere  outside  of  this  country.  The 
silver  dollar  is  f  of  an  inch  in  diameter  and  T§ g^  of  an  inch  thick.     It  is  a  legal  tender  in  any  amount. 

The  subsidiary  coins  are  the  half-dollar,  quarter-dollar,  and  dime,  all  of  silver;  and  the  5-cent  nickel  and  the 
copper  cent.  None  of  these  is  intrinsically  worth  its  face.  The  silver  subsidiary  coins  are  legal  tenders  in  amounts 
not  exceeding  ten  dollars,  while  coppers  and  nickels  are  legal  tenders  in  amounts  up  to  25  cents. 

If  one  has  gold  alloyed  in  the  proper  proportion  for  coining,  the  government  mint  will  coin  it  for  him  free 
of  charge. 

HOW  TO  DETECT  COUNTERFEIT  COIN. 

Throw  the  coin  upon  the  counter  and  if  it  gives  a  clear  metallic  ring  it  is  genuine.  A  counterfeit  will  give 
a  dull  sound.  A  counterfeit  coin  if  a  little  worn  will  present  a  dull  appearance.  Again,  most  counterfeits  are  not 
well  moulded,  the  milling  on  the  edge  and  the  lines  on  the  sides  are  not  clear  cut.  Much  can  also  be  told  by  feel- 
ing the  coin.     A  counterfeit  coin  has  an  unctious  or  oily  feeling,  quite  different  from  the  genuine.  • 

HOW  TO  DETECT  COUNTERFEIT  BILLS. 

In  detecting  counterfeit  bills  notice  the  clearness  of  the  geometric  lathe  work  about  the  denominational 
figure.     If  the  lines  are  clear,  uniform  and  exact  it  is  evidence  of  genuineness. 

Notice  the  shading  to  the  letters  and  figures  and  other  ruling  engine  work.  If  the  lines  are  smooth  and 
parallel  it  is  evidence  of  genuineness.  In  counterfeit  notes  these  lines  are  engraved  by  hand  and  are  more  or  less 
imperfect,  while  in  genuine  bills  they  are  engraved  by  machinery  and  are  mathematically  correct. 

Notice  the  quality  of  the  portraits  and  vignettes  on  the  bill.  In  the  genuine  these  are  clear,  distinct  and 
full  of  expression,  while  in  the  counterfeit  they  are  usually  dull,  expressionless  and  more  or  less  imperfect.  The 
government  employs  a  very  superior  class  of  artists  for  this  work,  and  counterfeiters  are  usually  unable  to  equal 
them. 

The  texture  and  fibre  of  the  paper  is  another  test,  although  not  an  infallible  one.  The  paper  of  genuine 
bills  is  made  to  the  order  of  the  government  and  is  pliable  but  tenacious,  while  the  paper  of  the  counterfeiter  is 
usually  of  a  cheaper  grade,  with  more  stiffness  and  easily  torn. 

The  ink  on  a  counterfeit  bill  is  usually  of  an  inferior  quality  to  that  used  by  the  government,  and  presents 
a  dull  and  cheaper  appearance,  while  the  ink  on  a  genuine  bill  is  of  a  brighter  and  richer  hue,  and  gives  to  the  bill 
more  of  a  cheerful  appearance. 


22  HOW  BUSINESS  IS  EONE. 

Bills  have  been  "raised"  by  scraping  off  the  denominational  number  and  pasting  thereon  a  counterfeit 
number  of  a  larger  denomination.  Thus  a  $5  bill  may  be  changed  to  $20,  and  several  clever  forgeries  have  in  this 
way  been  committed.  By  close  inspection  such  forgery  may  be  detected  in  the  geometric  lathe  work  around  the 
figure  as  the  lines  will  be  broken  and  show  the  patch  work.  In  this  case  the  counterfeit  relies  on  the  genuineness 
of  the  other  parts  of  the  bill  to  carry  it  through.  If  you  are  in  doubt  about  the  genuineness  of  a  bill,  if  possible 
examine  it  under  a  magnifying  glass. 

Lastly,  always  remember  that  the  Statutes  of  the  United  States  make  it  a  penitentiary  offence  to  knowingly 
pass  counterfeit  money,  or  even  to  have  it  iu  your  possession,  unless  innocently. 

HOW  TO  MAKE  CHANGE. 

It  is  universally  conceded  that  it  is  preferable  to  make  change  by  the  process  of  addition  rather  than  by 
subtraction.  Start  in  your  mind  with  the  amount  to  be  paid  you  and  add  to  it  enough  to  make  even  dollars  and 
from  that  up  to  the  amount  that  was  handed  you.  Repeat  this  aloud  in  the  hearing  of  your  customer  throwing 
the  change  down  before  him  as  you  do  so.  When  another  pays  you  always  count  it  again  in  his  presence  before 
leaving  him. 

HOW  TO  COUNT  CURRENCY. 

In  the  counting  of  currency  there  is  both  a  physical  and  mental  process.  The  first  has  to  do  with  the  man- 
ipulation of  the  bill  itself  and  the  second  with  the  counting  proper. 

Bank  tellers  usually  take  the  bills  in  the  left  hand,  the  palm  of  the  hand  being  up,  and  the  thumb  on  top 
of  the  pile  and  used  as  a  lever  to  push  the  bills  away,  the  right  hand  being  used  to  draw  the  bill  out  of  the  left. 
At  the  same  time  the  thumb  and  ends  of  the  fingers  of  the  left  hand  are  gently  pressed  together  so  that  the  oper- 
ator may  get  the  feeling  of  the  bill,  and  also  to  prevent  drawing  two  bills  from  the  hand  at  the  same  time.     In  all 

cases  the  bills  should  be  arranged  with  the  face  up.  Another  way  used  by  many  good 
tellers  and  said  to  be  equally  as  rapid  and  reliable,  is  to  hold  the  bills  down  on  the 
desk  with  the  left  hand  and  wrist,  and  pinch  them  up  with  the  forefinger  and  thumb 
of  the  right  hand,  the  fingers  being  moistened  by  a  saturated  sponge  kept  near.  The 
latter  is  the  only  method  possible  when  the  bills  are  in  packages  and  are  to  be  left 
intact. 

In  counting  the  bills  the  teller  begins  with  the  first  bill  on  top  which  we  will  say 
happens  to  be  a  five-dollar  note.  This  bill,  he  counts  as  one.  Next  comes  a  $10  bill, 
which  being  equal  to  two  fives,  he  counts  as  two.  This  makes  the  total  count  three.  Then  comes,  we  will  say,  a 
$20  bill  which  is  equal  to  four  fives  and  adds  four  to  his  count  which  makes  it  seven.  Now  comes  another  five 
which  adds  one  to  the  count  and  brings  the  total  to  eight.  Next  is  a  $50  bill  which  is  equal  to  ten  fives  and  is 
counted  as  ten.  This  brings  the  count  to  eighteen.  Then  comes  a  $1  and  a  $2  bill  which  he  throws  aside  and 
does  not  count  at  present.  The  next  is  a  $100  bill  which  adds  twenty  to  his  count  and  brings  the  total  to  thirty- 
eight,  that  is  thirty-eight  times  $5  which  is  $190.  In  other  words,  the  $5  bill  is  taken  as  the  unit  and  if  any  smaller 
bills  are  in  the  package,  they  are  counted  separately  and  added  to  the  total.  In  counting  smaller  bills,  the  one- 
dollar  bill  is  used  as  the  unit. 

HOW  TO  COUNT  COIN. 

In  counting  coin,  the  pile  is  thrown  on  the  counter.  The  left  hand  is  placed  against  the  breast  slightly 
below  the  level^of  the  desk,  and  with  the  right  hand  the  coins  are  scraped  off  from  the  desk  into  the  hand,  and 
the  counting  is  done  as  they  drop  into  the  hand.  It  is  considered  best  to  sort  each  kind  first  by  itself  and  count 
each  kind  separately.  In  counting  gold,  the  mental  process  is  the  same  as  when  counting  currency,  but  in  count- 
ing mixed  silver,  the  quarter  is  used  as  the  unit.  In  handling  gold  great  care  must  be  observed  to  see  that  the 
coin  is  full  weight  or  nearly  so  as  otherwise  a  discount  will  be  charged  at  the  bank  of  deposit  receiving  the  coins. 

ABRASION   OF  COINS. 

If  one  takes  gold  coin  to  his  bank  and  offers  it  for  deposit,  the  chances  are  that  each  coin  will  be  carefully 
weighed  before  credit  is  given  for  them.     The  law  on  this  subject  reads  as  follows  : 

"  Which  coins  shall  be  a  legal  tender  in  all  payments  at  the  nominal  value  when  not  below  the  standard  weight  and  limit  of 
tolerance  provided  in.this  act  for  the  single  piece,  and  when  reduced  in  weight,  below  said  standard  and  tolerance,  shall  be  a. legal 
tender  at  valuation  in  proportion  to  their  actual  weight;  and  any  gold  coin  of  the  United  States,  if  reduced  in  weight  by  natural 
abrasion  not  more  than  one-half  of  one  per  centum  below  the  standard  weight  prescribed  by  law,  after  a  circulation  ot  twenty  years, 
as  shown  by  its  date  of  coinage,  and  at  a  ratable  proportion  for  any  period  less  than  twenty  years,  shall  be  received  at  their  nominal 
value  by  the  United  States  Treasury  and  its  offices,  under  such  regulations  as  the  Secretary  of  the  Treasury  may  prescribe  for  the  pro- 
tection of  the  Government  against  fraudulent  abrasion  or  other  practices;  and  any  gold  coins  in  the  Treasury  of  the  United  States 
reduced  in  weight  below  this  limit  of  abrasion  shall  be  recoined."— Extract  front  U.  S.  Statute. 

As  the  value  of  a  grain  of  gold  is  between  four  and  five  cents  it  is  the  custom  to  deduct  four  cents  for  every 
grain  or  fraction  of  a  grain  that  the  coin  is  short  in  weight. 


HOW   BUSINESS  IS  DONE.  23 

EXCHANGE. 

The  great  financial  center  of  the  world  is  London.  The  financial  center  of  this  country  is  New  York. 
Here  is  controlled  a  large  amount  of  wealth  that  is  invested  in  all  parts  of  the  country.  Surrounding  these  cen- 
ters like  satelHtes,  are  smaller  centers  each  a  center  of  a  smaller  circle.  Thus  Chicago  is  the  financial  center  of  a 
large  territory  immediately  surrounding  it.  San  Francisco  is  another  for  the  Pacific  coast.  But  these  lesser 
financial  centers  form  a  community  whose  center  is  New  York.  A  western  merchant  goes  to  New  York  to  pur- 
chase goods.  He  does  not  take  with  him  the  actual  money  he  expects  to  need  in  the  purchase  of  his  bills.  His 
money  he  leaves  on  deposit  in  his  home  bank.  He  buys  $10,000  worth  of  goods  on  10,  15,  30  or  60  days  time  as 
the  case  may  be,  and  they  are  shipped.  The  result  is  that  at  the  end  of  his  term  of  credit  he  has  $10,000  to  pay 
in  New  York  for  his  debt  is  due  there  aud  not  at  home.  His  money  is  in  his  home  bank  but  due  in  New  York. 
How  shall  he  get  it  there?  He  could  of  course  send  it  by  express,  but  that  would  be  expensive  for  so  large  a  sum. 
The  best  method  considering  the  expense  is  doubtless  the  bank  draft.  He  draws  his  check  payable  to  "New 
York  draft,"  takes  it  to  his  bank  and  gets  for  it  their  draft  on  a  New  York  bank  for  the  amount  wanted.  But  how 
does  the  Western  banker  have  the  right  to  draw  on  the  New  York  bank?  As  has  been  said  New  York  is  the 
financial  center  of  this  country  and  nearly  all  banks  keep  a  deposit  with  some  New  York  bank,  against  which  they 
can  draw  their  drafts  as  they  have  calls  for  them.  This  is  called  selling  New  York  Exchange.  At  certain  seasons 
of  the  year  there  is  a  general  movement  of  crops  and  farm  products  from  west  to  east,  these  will  be  sold  in  the 
east,  and  checks,  certificates  of  deposit  and  cashier's  checks  on  New  York  banks  will  be  received  for  them  by  the 
western  shipper.  These  he  will  deposit  in  his  western  bank  and  as  soon  as  deposited  he  ca.n  immediately  check 
against  them.  The  bank  receiving  these  exchanges  will  forward  them  to  its  New  York  correspondent  bank  for 
credit.  At  this  time  it  may  be  that  there  is  but  little  call  from  its  customers  for  New  York  drafts.  Consequently, 
it  will  under  such  conditions  have  a  larger  balance  to  its  credit  in  New  York  than  it  wishes  or  can  use,  for  any- 
thing above  what  it  can  use  would  be  idle  capital,  aud  banks  to  earn  the  most,  must  keep  their  money  moving. 

On  the  other  hand  there  are  seasons  when  the  West  is  buying  extensively  of  the  East,  that  it  is  difficult  for 
the  western  banks  to  maintain  a  balance  in  New  York  sufficient  to  meet  the  demands  that  are  made  upon  them 
for  New  York  exchange.  In  Chicago,  there  are  certain  large  dealers  and  shippers,  like  Swift  &  Co.,  Armour  & 
Co.,  and  certain  members  of  the  Board  of  Trade,  who  daily  have  large  amounts  of  New  York  exchange  to  deposit. 
On  the  other  hand  there  are  a  large  number  of  merchants,  such  as  Marshall  Field  &  Co.,  Maudel  Bros.,  and 
others,  who  are  constant  buyers  of  New  York  exchange.  The  banks  endeavor  to  get  a  fair  division  of  customers, 
that  is,  to  get  some  customers  that  are  sellers  of  New  York  exchange  and  some  that  are  buyers;  in  this  way  the 
New  York  account  is  kept  stable  without  being  obliged  to  send  the  actual  money  by  express  to  adjust  it.  This 
equilibrium  of  customers  cannot  always  be  preserved,  and  as  a  result  certain  banks  are  constant  sellers  of  New 
York  exchange,  while  other  banks  are  constant  buyers  of  it.  A  portion  of  the  account  of  these  large  shippers 
and  merchants  is  eagerly  sought  after.  They  usually  divide  their  business  and  carry  accounts  at  several  banks. 
In  case  a  Chicago  bank  is  short  on  New  York  exchange  it  may  call  up  one  of  its  heavy  depositors  of  such  exchange 
and  ask  him  if  he  can't  give  them  a  large  amount  of  New  York  exchange  to-day.  Not  being  able  to  get  sufficient 
from  its  customers  it  must  look  elsewhere.  It  will  probably  then  inquire  of  other  banks  who  may  have  more  than 
they  need.  If  they  are  successful  in  securing  it  a  voucher  will  be  drawn  for  it  and  this  voucher  is  sent  through 
the  clearing  house.  The  New  York  draft  received  will  be  forwarded  immediately  by  mail  for  credit  and  drafts  will 
be  sold  agaiust  it  immediately. 

It  sometimes  happens  that  owing  to  this  ebb  and  flow  of  credit  from  east  to  west  and  from  west  to  east, 
practically  all  of  the  Chicago  banks  are  in  need  of  New  York  credit,  or  a  majority  of  them  have  too  much  New 
York  credit.  If  a  bank  has  too  large  a  balance  there  and  takers  of  it  are  not  plenty  it  will  offer  it  at  a  discount. 
If  it  does  nbt  have  enough  and  it  is  hard  to  secure  it  will  offer  a  premium.  If  need  be  the  actual  money  may  be 
sent  by  express  either  to  or  from  New  York  but  the  charge  to  bankers  for  this  service  is  $1.00  per  thousand.  The 
time  required  is  two  days  and  the  interest  for  this  period  is  figured  at  10  cents  making  a  total  charge  of  $1.10  per 
thousand.  This  serves  as  a  limit  to  the  rates  of  exchange  and  the  rates  of  New  York  exchange  quoted  in  the  daily 
papers  rarely  exceeds  $1.00  discount  or  $1.00  premium.  Sometimes  the  two-days'  time  is  a  consideration  and  the 
rate  goes  to  $1.15  or  even  $1.25.     These  quotations  are  per  $1000. 

The  daily  papers  in  Chicago  quote  the  rates  on  New  York  exchange.  By  observing  this  the  shifting  of 
credit  back  and  forth  between  the  East  and  West  can  be  noted.     It  is  thus  an  index  of  the  course  of  business. 

In  Chicago  there  is  a  broker  who  makes  it  his  business  to  inform  the  banks  by  10:00  A.  M.  what  banks  have 
exchange  to  sell  and  what  banks  wish  to  buy.  For  this  service  he  is  paid  a  small  fee  per  $1000,  but  which  aggre- 
gates him  a  good  return  for  his  trouble. 

While  New  York  exchange  may  be  at  a  premium,  yet  if  a  customer  has  a  New  York  draft  to  deposit  he  will 
only  get  credit  for  its  face.  If  he  wishes  to  buy  New  York  exchange  he  must  usually  pay  a  small  fee  for  it  regard- 
less of  the  course  of  exchange.  If  a  customer  keeps  a  large  balance  to  his  credit,  he  can  usually  get  what  drafts 
he  wishes  without  extra  fees,  but  the  ordinary  customer  pays  a  small  fee. 


24 


HOW  BUSINESS   IS   DONE. 


FOREIGN  EXCHANGE. 

Dealings  in  Foreign  Exchange  in  this  country  are  limited  in  the  interior  to  a  few  of  the  principal  banking 
institutions,  while  the  bulk  of  such  transactions  is  confined  to  the  seaboard — mainly  New  York.  In  the  latter 
metropolis  a  number  of  large  European  financial  institutions  have  branch  offices  and  others  are  represented  by 
firms  in  whom  they  are  financially  interested.  Their  dealings  in  the  aggregate  amount  to  millions  daily  and  it  is 
through  their  agency  that  the  balance  of  trade  between  this  and  other  countries  finds  its  ebb  and  flow.  We 
export  and  import  commodities,  and  when  the  value  of  the  one  exceeds  the  other  the  difference  must  be  settled  in 
money — the  world's  money ;  gold  or  its  equivalent ;  hence  the  necessity  for  agents  skilled  in  the  knowledge  of  the 
financial  affairs  of  other  countries  as  well  as  of  their  own.  These  agents  are  generally  referred  to  in  the  daily 
market  reports  as  foreign  bankers,  though  most  of  the  members  of  these  international  firms  are  men  of  American 
birth  and  parentage. 

Foreign  Exchanges  are  worked  by  means  of  Cable  Transfers,  Sight  and  Time  Drafts,  Commercial  Credits, 
Travelers'  Credits,  Shipments  of  gold  and  silver  coin  or  of  gold  and  silver  bullion,  and  Foreign  currencies. 

Cable  Transfers  are  transactions  that  find  their  consummation  as  quick  as  electricity  can  work.  Money  is 
paid  into  a  bank  in  London  with  instructions  to  be  paid  over  to  a  fourth  party,  say  in  Chicago.  With  a  very  few 
words  in  cipher  the  London  banker  instructs  his  Chicago  correspondent  to  pay  John  Jones  a  certain  amount,  and 
in  case  John  Jones  is  within  easy  reach,  it  is  possible  that  the  duration  of  the  entire  transaction  from  incipiency  to 
finish  may  not  have  been  more  than  twenty  minutes. 

Bills  of  Exchange  are  divided  into  two  classes  :  Bankers'  bills  and  Commercial  bills,  and  again  both  classes 
are  divided  into  demand  and  time  bills.  Bankers'  bills  are,  as  the  name  implies,  those  drawn  by  banks  or 
bankers.  They  command  higher  prices  than  Commercial  bills  owing  to  the  fact  that  the  makers  and  drawees  are 
well-known  financial  institutions,  and  that  their  ultimate  redemption  is  reasonably  assured.  This  class  of  bills  is 
eagerly  sought  after  by  importers  and  others  having  indebtedness  to  settle  abroad.  As  a  rule  they  are  drawn  on 
demand,  at  30,  60  or  90  days'  sight,  seldom  longer  than  the  latter  period.  They  are  issued  in  sets  of  three — first, 
second  and  third  of  exchange. — In  the  case  of  long  time  bills,  sixty  or  ninety  days  sight,  the  first  of  exchange  is 
frequently  sent  to  the  domicile  of  the  drawees  for  acceptance,  there  to  be  held  subject  to  the  call  of  the  duly 
endorsed  second  or  third  of  exchange,  and  is  so  marked  on  its  face,  while  cross  lines  are  drawn  on  the  back  to 
prevent  its  being  endorsed  by  inadvertance ;  at  the  same  time  an  annotation  is  placed  on  the  face  of  both  second 
and  third  of  exchange  that  "  The  first  of  exchange  is  held  by  N.  M.  for  acceptance,  subject  to  the  call  of  the  duly 
endorsed  second  or  third  of  exchange."  This  method  would  be  adopted  by  a  merchant  having  a  balance  to 
settle  in  South  America,  and  who  would  wish  to  minimize,  as  far  as  possible,  the  loss  of  interest  on  the  money 
while  in  transit.  By  buying  a  sixty  days'  sight  bill  on  London,  and  sending  the  first  of  exchange  to  a  London 
bank  for  acceptance,  and  at  the  same  time  starting  the  second  and  the  third  of  exchange,  duly  endorsed,  on  its 
mission  to  South  America,  either  of  the  latter  would  reach  Loudon  about  the  time  of  the  maturity  of  the  bill, 
and  the  merchant  would  have  received  the  interest  in  the  lower  price  paid  for  the  sixty  days  sight  bill  as  against 
the  cost  of  a  demand  bill. 

Commercial  Bills,  (Form  1,)  are  those  drawn  by  merchants  in  reimbursement  of  the  sale  of  merchandise, 
and  are  either  clean  or  documentary  bills,  issued  on  demand  oron  time.    Clean  bills  are  generally  drawn  in  settle- 
ment of  balances,  while  documentary  bills  are  made  to  cover  specific  shipments. 
form  i.  First  of  a  Commercial  Bill. 


&xthm$p  far 


The  negotiability  of  clean  bills,  that  is  such  without  any  documents  supporting  them,  depends  upon  the 
financial  standing  of  the  makers,  while  documentary  bills  as  a  rule,  under  ordinary  market  conditions,  find  a 
ready  sale,  as  the  goods  against  which  the  bill  is  drawn  are  pledged  as  security  for'  the  ultimate  payment  of  the 
bill,  and  for  the  purpose  of  placing  this  condition  beyond  a  doubt,  a  special  document  called  a  letter  of  hypotheca- 


HOW   BUSINESS   IS   DONE.  25 

Hon  is  attached.  (Form  2.)  As  a  further  precaution  to  all  interested  parties  insurance  is  provided  to  cover  the 
merchandise  against  all  risks,  marine,  fire,  loss  and  partial  damage,  and  such  insurance  is  embodied  in  a  certificate 
issued  by  some  insurance  company  of  established  reputation,  and  as  a  rule  is  made  payable  to  the  insured  or 
order.  The  last  and  most  important  document  attached  to  this  class  of  bills  is  the  Bill  of  Lading  made  out  in  the 
name  of  the  shipper  and  by  him  endorsed  in  blank.  As  the  goods  are  deliverable  at  point  of  destination  only 
upon  surrender  of  the  Bill  of  Lading,  it  follows  that  in  case  of  default  in  payment  the  parties  holding  the  Bill  of 
Lading  can  obtain  the  goods  and  dispose  of  them  by  sale  without  haying  recourse  to  expensive  legal  process. 
Documentary  bills  are  as  a  rule  made  out  in  duplicate  or  triplicate,  and  are  readily  merchantable  when 
accompanied  by  the  following  documents  : 

I. — Bills  of  Lading  in  duplicate  or  triplicate,  issued  by  a  transportation  company  to   the   order  of  the 
shipper,  and  by  him  endorsed  in  blank. 

II. — Certificate  of  Insurance  in  duplicate  payable  in  case  of  loss  to  the  order  of  the  insured  and  by  him 
also  endorsed  in  blank. 

III. — Letters  of  Hypothecation  pledging  the  goods  shipped,  as  security  for  the  ultimate  payment  of  the  bill 
and  containing  conditions  as  to  the  disposal  of  the  documents,  whether  such  are  to  be  surrendered  to  the  drawee 
upon  acceptance  or  upon  payment  of  the  bill  of  exchange,  and  also  providing  for  a  rate  of  interest  to  be  rebated 
to  the  drawee  in  case  he  should  desire  to  retire  the  bill  prior  to  maturity.  Additional  documents  are  sometimes 
required  to  cover  specific  cases  or  to  conform  to  customs  regulations  in  foreign  ports,  such  as  Certificates  of 
analysis  as  in  the  case  of  iron  ore,  flax-seed,  cotton  oil,  kerosene,  etc.  Certificates  of  origin,  where  discrimination  is 
practiced  against  products  of  certain  countries.  Certificates  of  inspection,  in  grain  shipments.  Certificates  of 
microscopic  inspection  in  meat  shipments.  Weight  notes,  invoices,  etc.,  etc. 
form  2.  Letter  oe  Hypothecation. 


ft U&&fcu&%- 189 A, 


Chicago 

TO  WHOM  IT  MAY  COJfCERJf. 
Sirs:  Tf* 

/0  ^74^    have  this  day  sold  to  the  FIRST  NATIONAL  BANK,  a  Bill  of  Exchange 

^ .  f  i-%y  '/&,-    .      j.     ^   /? _ 


against  a  shipment  of. 


The  agreement  with  the  FIRST  NAT'L  BANK,  is\that  the  Bill  of  Lading ^t-tf: lodged  as  Col- 
lateral security  for  the  acceptance  and  payment  'of  tfiis  draft. 

In  case  the  drawees  decline  to  accept,  or  if  the^m.1  be  not  paid  at  maturity,  then  you  are  hereby 
authorized  at  any  time,  at  your  discretion,  to  placekhe  property  covered  by  said  Bill  of  Lading,  as 
above,  in  the  hands  of  your  Brokers,  for  sale  on  aliSBunt  of  whom  it  may  concern,  and  apply  the  pro- 
ceeds toward  the  payment  of  the  Bill,  and  in  case  &**l>y  deficiency  hereby  agree  to  pay  the  amount 
of  such  deficiency  to  the  FIRST  NAT'L  BANK,  o\nrMmand;  and  also,  that  if  you  should  require  the 
transfer  of  the  "Policy  of  the  Marine  Insurancer"k>\c  same  shall  be  given,  and  in  case  of  refusal  to 
transfer  by  the  parties  drawn  on,  then  you  are  tcShave  the  privilege  of  effecting  a  special  insurance, 
for  cost  of  which  you  are  to  have  a  lien  on  the  abltuzrkierchandise. 

It  is  understood  that  in  the  event  of  the  Bill/bttng  paid  under  discount,  rebate  of  interest  shall 
be  allowed  at  the  rate  of  one-half  of  one  per  centt  /M  annum  abmpUhe  advertised  rate  of  interest  for 
short  deposits  allowed  by  the  leading  Joint  StockfWinks  of  LontLyli.J 

You^^espectfMli/A/Cu .    //]  **?  ■   ' 

xq  k  _ C^^4^y^^^y 

Insured  in      X^^<^^^    —*« „.  / 

Commercial  credits  are  used  for  the  purpose  of  importing  merchandise,  and  are  granted  by  banks  and 
bankers  to  importers  of  approved  standing,  and  enable  the  sellers  to  place  themselves  in  funds  immediately  upon 
shipment  of  the  commodities  purchased.  They  are  as  a  rule  available  by  draft  of  the  shipper  upon  some  banking 
center — London,  Paris,  Amsterdam,  Hamburg  or  Antwerp — at  sight,  thirty  or  sixty  days,  three  months,  or  four 
months  ;  and  for  coffee  and  tea  purchases  where  the  goods  are  shipped  by  sailing  vessel,  at  six  months  sight.  Such 
drafts  must  as  a  rule,  be  accompanied  by  Bills  of  Lading,  Insurance  Certificates  or  Policies  of  Insurance,  Consular 
Invoices,  and  any  other  special  documents  which  may  be  required.  When  such  documents  are  found  in  order  and 
surrendered,  the  draft  is  accepted  by  the  bank  prescribed  in  the  letter  of  credit  for  account  of  the  bank  of  issue,  and 
can  then  be  negotiated  by  the  shipper  at  most  favorable  rates,  as  such  bills  also  come  under  the  head  of  Bankers' 
Bills.  One  set  of  the  documents  evidencing  the  shipment  of  the  commodities  purchased  is,  as  a  rule,  sent  to  a 
custom  house  broker  designated  in  the  Letter  of  Credit,  for  account  of  the  issuing  bank,  while  the  remaining 
documents  are  sent  to  the  bank  itself.  The  custom  house  broker  attends  to  the  clearance  of  the  goods 
immediately  upon  the  arrival  of  the  vessel,  pays  the  duties  when  dutiable,  and  forwards  or  stores  the  goods  as  the 
bank  may  direct.  Inasmuch  as  the  bank  issuing  the  letter  of  credit  has  a  lien  upon  the  goods  until  a  settlement 
is  had  with  the  importer,  great  care  must  be  exercised  in  the  handling  of  the  documents  to  prevent  the  bank's 


20  HOW   BUSINESS  IS   DONE. 

interest  in  anyway  being  jeopardized,  and  consequently  each  step  must  be  jealously  and  religiously  watched  to 
prevent  the  title  of  the  property  slipping  beyond  me  bank's  control.  As  the  importer  is  virtually  using  the 
bank's  credit,  a  commission  is  charged  for  this  service,  gauged  by  the  life  of  the  drafts,  and  settlement  is  had 
sufficient  time  prior  to  maturity  to  enable  a  remittance  to  reach  the  banking  point  where  the  acceptance  is 
domiciled. 

Travelers'  Letters  of  Credit  are  used  by  persons  traveling  from  one  place  to  another,  and  similar  to  Com- 
mercial Letters  of  Credit  are  available  by  draft  on  a  banking  center,  generally  London,  in  which  case  they  are 
issued  in  Pounds  Sterling.  On  a  fly  sheet  or  on  a  separate  letter  of  introduction  called  the  Letter  of  Indication,  is 
printed  a  list  of  the  correspondents  of  the  issuing  bank,  and  at  any  one  of  the  cities  or  towns  designated,  the 
holder  can  negotiate  his  drafts  until  the  sum  for  which  the  Letter  of  Credit  is  issued  is  exhausted.  With  the  last 
draft  the  Letter  of  Credit  is  taken  up,  canceled  and  returned.  The  holder  immediately  upon  receiving  the  Letter 
of  Credit  is  required  to  sign  his  name  in  a  special  place  provided  on  the  face  of  the  Letter  of  Credit  or  upon  the 
Letter  of  Indication,  and  this  signature  serves  as  a  guide  to  the  bankers  in  the  various  parts  of  the  world  in 
determining  the  rightful  ownership  of  the  letter.  As  a  travelers'  Letter  of  Credit  is  supposed  to  be  used  for 
personal  expenses,  comparatively  small  sums  only  are  drawn  at  a  time,  and  as  drafts  are  negotiated,  the  amounts 
are  endorsed  on  the  Letter  of  Credit  itself  by  the  bank  or  banker,  thus  enabling  each  successive  correspondent  to 
perceive  at  a  glance  to  what  extent  the  credit  had  been  used.  As  a  matter  of  convenience  and  safety  this  method 
of  carrying  money  surpasses  all  others.  Another  form  of  travelers'  credit  is  the  Circular  Note,  which  is  an 
English  institution,  and  has  found  but  few  imitators  elsewhere.  A  Letter  of  Introduction  with  signature  of  the 
holder,  and  a  list  of  correspondents  is  furnished  to  the  traveler,  together  with  a  certain  number  of  drafts  or  notes 
issued  for  stated  amounts,  generally  in  multiples  of  Ten  Pounds  Sterling,  engraved  in  a  more  or  less  intricate 
design  to  prevent  counterfeiting,  and  are  made  out  payable  to  the  order  of  the  holder  of  the  letter  of  indication. 

Shipments  of  gold  coin  and  gold  bullion  generally  take  place  to  settle  balances  of  trade  between  two 
foreign  countries,  and  is  evidence  of  a  balance  against  the  country  from  which  they  are  made.  Thus  the  parity  of 
exchange  between  the  United  States  and  Great  Britain  is  48665,  i.  <?.,  $4.86  and  T605ff  cents  for  the  pound  sterling, 
and  when  the  price  of  Sterling  falls  below  this  point,  it  is  said  the  exchanges  are  in  favor  of  the  United  States,  and 
when  it  rises  above,  it  is  against  us.  Favorable  exchange  means  that  we  are  exporting  more  of  our  products  than 
we  are  importing,  and  proportionately  as  exchange  falls  our  balance  is  increased  until  it  reaches  a  point  where  the 
rate  is  so  far  below  the  parity  as  to  enable  the  debtor  nation  to  include  the  cost  of  shipping  gold  bullion  or  gold 
coin.  The  cost  of  such  shipments  being  about  Y%  of  one  per  cent.,  the  price  of  Sterling  Exchange  would  have  to 
fall  to  about  484^  before  gold  could  be  imported  into  this  country  without  loss,  and  vice  versa  Sterling 
Exchange  would  have  to  rise  to  about  488j£  before  it  could  be  exported.  The  chief  depository  of  the  gold  of  the 
world  is  the  so-called  Old  L^dy  of  Threadneedle  Street,  the  Bank  of  England,  and  a  withdrawal  of  the  yellow 
metal  for  export,  even  in  its  incipiency  is  viewed  with  more  or  less  alarm.  Immediately  measures  are  adopted  to 
make  withdrawals  more  difficult,  gentle  ones  at  first,  and  if  these  do  not  prove  effective  then  more  stringent  ones  ; 
thus  during  the  era  of  an  adverse  balance  in  1896,  the  price  of  American  gold  coin  was  successively  advanced 
from  76  shillings  3d  per  ounce  to  76  shillings  8d  per  ounce,  and  these  measures  not  retarding  the  outflow,  the 
minimum  rate  of  discount  was  raised  from  2  per  cent.,  at  which  figure  it  remained  stationary  for  over  three  years, 
to  2l/i  and  to 3  per  cent. 

The  stock  of  gold  in  the  vaults  of  the  Bank  of  England  consists  in  bar  gold,  sovereigns  and  foreign  coins. 
These  latter  are  not  melted  down  as  is  commonly  supposed,  but  are  kept  separately  in  bags  of  500  ounces 
each.  Each  denomination  of  coin  has  its  price,  expressed  in  shillings  and  pence  according  to  its  fineness. 
Should  an  export  demand  for  gold  to  the  United  States  arise,  eagles  and  double  eagles  are  bought  in  preference  to 
other  coin  or  bullion,  as  they  would  be  immediately  available  as  money  upon  arrival  in  this  country,  whereas 
other  coins  or  bar  gold  would  first  have  to  pass  through  the  Government  assay  office,  entailing  a  serious  delay  in 
times  of  stringency,  and  considerable  expense.  The  eagle  and  double  eagle  weigh,  in  theory,  respectively  258 
and  516  grains  at  nine-tenths  fine,  but  as  all  coins  suffer  more  or  less  by  abrasion,  and  are  not  even  true  weight 
when  leaving  the  mint,  it  is  impossible  to  make  up  parcels  of  500  ounces  by  tale  of  the  coins ;  they  are,  there- 
fore, weighed  in  bulk,  and  in  order  to  make  up  the  exact  weight  in  each  bag,  clippings  of  the  coin  are  added 
until  the  desired  result  is  reached. 

In  conclusion,  a  few  words  in  explanation  of  quotations  in  the  daily  papers  would  not  be  inopportune. 
Such  quotations  generally  read  as  follows  : 

Sterling 
60davs.         demand.  Cable.  60  days     demand 

Postedrates 48lj^         484>2  ...  f  Bankers francs  519^         51754 

..      .(Bankers 481  484  484J4  ACluai  \  Commercial "  520  518^ 

Actual  \  Commercial ..     480^         483#  ...  J  Bankers m;irks  U}i  94^ 

Acxuai  \  Commercial "  93^  91}/2 

Sterling  posted  rates  are  arbitrary  rates,  fixed  by  certain  prominent  foreign  bankers  for  the  settlement  of 
contracts  or  obligations,  payable  in  Pounds  Sterling  in  this  country,  such  as  acceptances  on  account  of  importers 
under  commercial  credits,  sterling  drafts  and  other  settlements.  The  term  "  actual  rates"  speaks  for  itself,  and 
are  the  rates  at  which  actual  trades  have  b<jen  made.  The  difference  between  bankers'  bills  and  commercial 
bills  has  already  been  explained.  Sterling  rates  are  quoted  for  so  many  dollars  and  cents  for  one  pound  sterling, 
and  is  lower  for  time  bills  than  for  demand  bills,  as  the  interest  is  included  in  the  price. 
Francs  are  quoted  at  so  many  francs  and  centimes  for  one  dollar. 
Marks  are  quoted  at  so  many  cents  for  four  marks. 


HOW   BUSINESS   IS   DONE. 


THE   CLEARING   HOUSE. 


No 


18. 

CHICAGO 


Form  No.  2. 


CLEARING   HOUSE. 


FROM 

CHICAGO  NATIONAL  BANK 


CLERK'S  STATEMENT 


189 


It  has  been  seen  that  in  the  ordinary  business  of  a  day  a  bank  cashes  many  checks  and  drafts  on  othjer 
banks  in  the  same  city.  They,  in  return,  get  many  of  its  checks.  In  a  large  city  there  may  be  fifty  such  batiks, 
each  of  which  has  in  this  manner  cashed  checks  on  the  other  forty-nine.  To  get  the  cash  on  these  checks  would 
necessitate  a  messenger  of  the  bank  making  a  trip  to  each  of  these  banks.  This  would  not  only  be  an  enormous 
expense,  for  we  must  remember  that  each  of 
the  banks  would  be  doing  the  same  thing, 
but  the  continual  flow  of  money  in  the 
hands  of  messengers  through  the  streets 
would  be  a  dangerous  practice.  To  avoid 
all  this  and  simplify  these  settlings  the 
clearing  house  was  organized. 

So  convenient  and  satisfactory  has  it 
been  found  to  be  that  they  are  now  found  in 
all  large  cities.  It  is  an  association  formed 
by  the  different  banks  interested.  A  man- 
ager is  elected,  and  a  room  that  is  suit- 
able is  provided.  Here,  at  a  given  hour  (in 
Chicago  11  A.  M.),  each  bank  that  is  a 
member  sends  two  clerks  :  one  is  called  a 
settling  clerk  and  the  other  a  specie  clerk. 
The  specie  clerk  brings  the  drafts  and  chet  ks 
on  other  banks,  properly  assorted  and  ar- 
ranged, and  the  settling  clerk  brings  a 
ticket  showing  the  amount  of  those  that 
are  against  each  bank.  This  ticket  is  handed 
to  the  manager.  As  a  ticket  is  deposited 
with  the  manager,  he  places  in  his  proof 
opposite  the  name  of  that  bank  the  total 
gross  amount  due  from  the  clearing  house 
to  that  bank,  but  it  yet  remains  to  be 
determined  the  amount  of  checks  and 
drafts  that  will  be  presented  by  the  other 
banks  against  this  one.  To  ascertain  this 
the  settling  clerks  take  positions  behind 
the  counter,  each  one  at  his  own  designated 
position,  and  the  specie  clerks  with  their 
packages  of  vouchers  stand  on  the  outside. 
At  a-  given  signal  each  specie  clerk  moves 
forward  until  he  comes  opposite  to  a  set- 
tling clerk,  to  whom  he  hands  a  package  of 
vouchers  drawn  on  his  (the  settling  clerk's) 
bank.  He  also  hands  him  a  list  of  these 
vouchers  and  their  total.  If  found  correct, 
the  settling  clerk  will  receipt  him  by  signing 
his  name  in  the  column  headed  "  Receipts  " 
in  Form  No.  2. 

This  occupies  but  a  moment,  and  at 
another  signal  each  specie  clerk  moves 
forward  before  the  next  settling  clerk,  where 
the  same  operation  is  repeated.  When  the 
specie  clerk   has  in  this  manner  made  the 

rounds  he  has  a  receipt  from  all  the  banks  on  whom  he  brought  vouchers,  and  each  settling  clerk  has  received 
and  receipted  for  all  vouchers  drawn  on  his  bank.  As  each  specie  clerk  passed  before  a  settling  clerk  he  would 
enter  in  the  "Bank's  Cr."  column,  in  Form  No.  3,  and  opposite  the  name  of  the  bank  represented  by 
that  specie  clerk,  the  amount  of  vouchers  on  his  bank  handed  him  by  that  clerk.  When  through,  each  column 
will  be  footed  and  the  difference  will  show  whether  his  bank  owes  the  clearing  house  or  it  owes  him,  and  how 
much.  The  "  Bank's  Dr."  column  was  filled  out  before  he  left  the  bank,  and  represents  the  amount  of  vouchers 
against  each  bank  that  the  specie  clerk  took  to  the  clearing  house.  After  verifying  his  work  he  will  make  out  a 
balance  ticket  Form  No.  4  and  hand  to  the  manager. 


No. 

MM 

DR.  MOUNTS 

RECEIPTS 

1 

First  National  Bank, 

4 

i  z  i 

4a 

• 

L 

• 

2 

National  Bank  of  America, 

/? 

j-( 

2 

3 

Merchants  National  Bank, 

/   / 

&  0  0 

3 

4 

Nor.  Western  Nat.        " 

/ 

4  re 

4 

5 

Commercial  Nat.           " 

J  f  </ 

7f 

S 

6 

Union  National             '' 

/ 

4J-? 

s 

7 

Mer.  Loan  &  Trust  Co., 

/J 

i  /  3- 

f>T 

7 

8 

Corn  Exchange  Bank, 

f* 

it 

8 

10 

Metropolitan  Nat.  Bank, 

* 

<f  4  (. 

■f-J 

10 

11 

Hibernian  Banking  Ass'n, 

y47 

r4- 

11 

12 

National  Bank  of  Illinois. 

/  a 

Sit 

12 

13.. 

Bank  of  Montreal, 

r 

a  e  0 

13 

14 

Hide  &  Leather  Nat.  Bank. 

a-4 

/c- 

14 

15 

Union  Trust  Co., 

>7 

4/ 

V 

16 

American  Exch'g  Nat.  B'k, 

/ 

/>«! 

16 

17 

Home  National  Bauk, 

a 

a  0  f 

17 

18 

Chicago  National  Bank. 

18 

19 

Continental  National  Bank, 

/  j 

&  *4 

<r<r 

19 

20 

Atlas  National  Bank, 

/ 

/  *~s 

20 

21 

Fort  Dearborn  Nat.  Bank, 

U.J-  c 

to 

21 

22 

Globe  National  Bank, 

•s  S 

4f 

22 

23 

Nat.  Bank  of  the  Republic, 

23 

24 

Bankers  Nat.  Bauk, 

94 

25 

Bauk  of  Commerce, 

25 

26 

26 

27 

27 

/  9 

??J 

*j  J 

28 


HOW  BUSINESS   IS   DONE. 


The  manager  will  take  these  balance  tickets  and  enter  the  amounts  in  his  proof  opposite  the  name  of  the 
bank  whose  number  the  ticket  bears,  each  bank  in  the  Clearing  House  being  known  in  all  matters  by  a  number. 
The  "Bank  Cr."  column  in  his  proof  was  made  up  before  the  clearings  began  from  the  tickets  that  were  handed 

Form  No.  3. 


CHICAGO   CLEARING    HOUSE. 

SETTLING  CLERK'S  STATEMENT, 


182 


Debit 
Balance 

No. 

BANKS. 

Credit 
Balance 

BANKS    DEBIT 

BANKS    CREOIT 

1 

First  National  Bank, 

d 

6  P  X 

do 

3-  /  r 

do 

2 

National  Bank  of  America, 

/  ? 

<r6 

J 

t  ?■  j 

*  <? 

3 

Merchants'  National  Bank, 

/    / 

Loo 

■<•  c 

4 

Nor.  Western  Nat.  Bank. 

/ 

d  r  a 

/  d  ^ 

/  / 

5 

Commercial  Nat.  Bank, 

j  7  d 

79 

/    J 

f*7 

fj 

6 

Union  National  Bank, 

• 

/ 

VoTp 

7 

Mer.  Loan  and  Trust  Co., 

/  <r 

6>  /  P- 

/j~ 

/ 

/  >/ 

/  6 

8 

Com  Exchange  Bank) 

f  * 

C  3 

10 

Metropolitan  Nat.  Bank, 

a 

1  d  6, 

J~0 

11 

Hibernian  Banking  Ass'n, 

7d  7 

rd 

/   / 

6  >  J- 

13 

National  Bank  of  Illinois, 

/  a 

S  6  d 

13 

Bank  of  Montreal, 

r 

O  0  0 

S~0  0 

14 

Hide  &  Leather  Nat.  Bank, 

a-a 

/i 

7  7 

/«/"• 

15 

Union  Trust  Co., 

*  7 

d  / 

d 

/  do 

16 

American  Exch'g  Nat.  Bank, 

/ 

/  >  p- 

17 

Home  National  Bank, 

yf 

0  0    0 

/  /  j 

/-2 

18 

Chicago  National  Bank, 

19 

Continental  Nat.  Bank, 

/  J 

C  2d 

J~0 

/  0 

0  /  j 

ds 

20 

Atlas  National  Bank, 

/ 

/  2  <r 

2  vT  i. 

21 

Fort  Dearborn  Nat.  Bank, 

d  j  6 

ro 

/  0    / 

/    *   <? 

c  / 

23 

Globe  Nat.  Bank, 

J~f 

Uf 

f  0    / 

<V" 

0 

23 

24 

M 

Total 
Clearings: 

Footings. 

X  2 

<?  (7  ,r 

2  j 

/  cf  7 

/  &  d 

.1  J- 

Balance, 

■7  // 

/  6,   f 

0  a 

• 

Proof, 

I        /   J~7 

/  c  a 

J* 

/*r* 

/  (,  d 

33- 

him  by  the  settling  clerks  when  they  entered.     The  "  Bank  Dr."  column  will  now  be  made  up  from  the  "balance 
tickets"  just  handed  him.     It  is  clear  that  these  columns  when  footed  should  balance. 

The  settling  clerk  now  takes  his  statement  back  to  his  bank  and  it  has  in  Chicago  until  12:30  P.  M.  in  which, 
if  the  balance  is  against  it,  to  make  it  good.  This  it  must  do  by  sending  the  actual  money  to  the  Clearing  House. 
If  the  balance  be  a  credit  one  it  has  until  12:45  P.  M.  in  which  to  send  for  it.     Money  sent  to  meet,  a  debit  balance 


HOW   BUSINESS    IS    DONE. 


29 


is  receipted  for  by  the  manager  as  he  receives  it  and  money  to  meet  a  credit  balance  is  paid  to  the  bank  messenger 
on  presentation  of  the  bank  cashier's  receipt  properly  signed. 


Form  No.  i. 


Credit  Ticket. 


LU 
CO 

o 


O 
O 

o 
o 


BAN 


K  No.  lO 


Chicago, 


^.0,189. & 


CREDIT 


CHICAGO  NATIONAL  BANK, 


*._ <L£J. 


Amount  of  checks  to  Clearing  House  this  day  per  Messen 


Form  No.  4. 

Balance  Ticket. 

1 

No.  18.                    Chicago  Clearing 

•  House                           180 

Amount  Receiv 
Amount  Brougl 

ed,  $ 

it,  $ 

Debit,   $ 1 

Credit  Balance  due 

CHICAGO  NATIONAL  BANK. 

$ 

Settling 

Clerk 

Form  No.  5. 


Receipt  Ticket. 


H 

US 

— 
H 

H 

a 

— 

m 
o 

LU 


Bank  No /  fi 

T^eceived  /£**»*— 


CHICAGO  CLEARING  HOUSE- ±Z\AAJJt J^&Jj&W 

l/^^t/// ... T-^y^^^—^^-^.. ^//-e>  te.<i*c*<-n^zJ 

in  full  for  balance  due  the  Associated  Uanks  tills  day.  Si  \ 


Forms  No.  1,  2  and  3  are  made  up  at  the  bank  before  leaving  for  the  clearing  house.     No.  1  is  complete  and 
from  it  the  manager  makes  up  the  "Banks  Cr."  column  of  his  proof-sheet.     No.  2  is  the  sheet  on  which  receipts 


30  .         HOW  BUSINESS  IS  DONE. 

are  taken  for  the  vouchers  delivered.  The  "Bank's  Dr."  column  of  No.  3  is  completed  at  the  bank.  "Bank's 
Cr."  column  is  filled  in  by  the  settling  clerk  as  the  vouchers  paid  by  other  banks  are  delivered  to  him.  The 
difference  between  the  footings  of  "Bank's  Dr."  and  "  Bank's  Cr."  columns  is  what  his  bank  owes  the  clearing 
house  or  the  clearing  house  owes  the  bank.  In  the  case  shown  in  the  cut,  his  bank  owes  the  clearing  house 
$74,169.09.  He  then  makes  out  a  ticket  to  that  effect  and  hands  it  to  the  manager.  From  these  tickets  the 
manager  completes  his  proof. 

From  this  brief  description  of  the  workings  of  a  Clearing  House  its  utility  and  its  advantages  in  the  saving 
of  time  as  well  as  its  security  can  readily  be  seen.  The  amount  of  vouchers  going  through  the  House  daily  is  a 
good  index  of  the  volume  of  business  being  transacted.  Hence  we  see  weekly  reports  in  the  newspapers  of  the 
amount  of  clearings  in  all  the  large  cities  in  comparison  with  the  amount  for  the  corresponding  week  in  the 
previous  year. 

WORTHLESS   CHECKS. 

A  bank  crediting  a  check  drawn  on  another  bank  has  no  means  of  knowing  whether  the  drawer  has  funds 
on  deposit  sufficient  to  meet  the  check.  It  is  sent,  however,  in  the  regular  course  of  business  to  the  clearing 
house,  and  is  received  by  the  settling  clerk  and  receipted  for  along  with  others  in  the  same  package.  He  takes  it 
to  his  bank  when  it  is  found  that  there  are  not  sufficient  funds  on  deposit  to  meet  it.  This  must  be  determined 
and  the  check  returned  to  the  bank  from  whom  received  by  2  o'clock,  and  a  settlement  is  made  for  it  between 
the  banks  direct. 

BANK  MESSENGERS. 

Notice  to  Cali,. 

First  National  Bank. 

189. 


To  do  their  collecting  of  notes 
and  drafts  and  to  present  for  collection 


or  acceptance  all  kinds  of  paper  the  CHICAGO.  m^^LsL 

bank  employs  one  or  more  messengers.       M  L^&tl'lS  stlZ^'W-^/^ 


tALL   TO-DAY    AND    ft*X,-r   A  <>»*«■    AS    STATED    BELOW: 


s 


If  a  party  on  whom  he  is  to  call  is  out 

or  cannot  be  seen  he  leaves  a  notice,  //  Very  Respectfully, 

similar  to  the  form   given  herewith,  G..M.  WILSON,  cashier. 

properly  filled  out.     If  it  is  a  paper      Dra(=t  Drawn  By s 

requiring  protest  the  bank's  notary 
will  present  the  paper  again  or  en- 
deavor to  do  so,  and  then  if  not  paid  "      __ $ 

or  accepted  as  the  case  may  be  he  will      Nqte  Favqr  Qp      .%zsn^^Jtet/ju/... - S  <^WW\ 

protest  the  paper.  £/  /  x 

If  a  draft  is  used  for  the  purpose 
of  collecting  an  account  instructions 
should  be  given  not  to  protest.  See 
page  37. 


Checks  offered  in  payment  of  Notes  and  Drafts  MUST  BE  CERTIFIED, 
BANK  CLOSES  AT  3  P.  M.    SATURDAYS  AT  12  M.  SHARP. 

PRESENT   THIS   NOTICE  TOTHE   NOTE   TELLER.  WINDOW  2. 


THE   HALF-CENT. 

It  is  the  rule  in  business  that  in  every  computation  where  the  result  is  one-half  cent  or  more,  a  cent  is 
added,  but  if  less  than  one-half  cent  it  is  dropped.  This  rule  applies  to  each  item  in  a  bill,  though  the  result 
may  make  a  difference  of  several  cents  in  the  footing.  Although  it  must  be  admitted  that  many  houses,  in  their 
desire  to  show  a  spirit  of  fairness  to  their  regular  customers,  adopt  the  rule  of  "Give  and  take" — that  is,  they 
take  the  half  cent  one  time  and  give  it  the  next.     But  the  general  rule  is  as  stated  above. 

Another  rule  in  this  connection  is  that  the  party  doing  the  figuring,  or  whose  duty  it  is  to  make  the  com- 
putation, takes  the  half-cent  in  his  own  favor.  Thus  in  figuring  discounts,  if  the  discount  be  $6.37  j£  he  drops  the 
half-cent,  or  takes  it,  as  the  case  may  be. 

BUILDING  AND  LOAN  ASSOCIATIONS. 

Somewhat  akin  to  savings  banks  in  their  objects  are  building  and  loan  associations,  but  they  are  conducted 
on  quite  a  different  plan.  Like  savings  banks  they  enable  the  earners  of  low  wages  to  put  aside  their  small  savings 
and  by  combining  these  with  those  of  others,  get  that  higher  rate  of  interest  which  only  an  aggregation  of  capital 
can  command.  As  the  title  would  suggest,  one  of  their  objects  is  to  enable  their  members  to  build  homes.  For 
this  purpose,  some  of  the  members  must  be  investors,  that  is  lenders,  and  others  borrowers.  They  exist  by  virtue 
of  special  state  statutes,  and  the  rules  governing  their  organization  and  management  differ,  but  they  have  a  general 
similarity. 

They  are  corporations  and  are  managed  by  their  officers.  The  par  value  of  a  share  of  stock  is  usually  $100.00. 
This  is  paid  for  in  monthly  installments  of  usually  fifty  cents  per  share.     These  monthly  payments  constitute 


HOW  BUSINESS  IS   DONE.  151 

the  paid  up  capital  of  the  concern  and  the  money  it  has  to  loan.      If  one  thousand  shares  of  stock  be  sold,  its 

monthly  income  from  that  source  would  be  $500.00.     This  money  it  loans  to  members  only.     Investing  members, 

that  is,  those  who  do  not  wish  to  borrow  from  the  association,  keep  on  paying  until  what  they  have  paid  and  their 

share  of  the  profits  amount  to  $100  00  per  share,  when  the  stock  is  said  to  have  matured,  and  they  are  paid  the  par 

value  of  the  stock  in  cash,  and  the  stock  is  cancelled.  The  time  necessary  for  the  stock  to  mature  depends  of  course 

on  the  amount  of  the  monthly  payment,  and  the  profits  earned  by  the  association.    It  usually  takes  an  association 

requiring  a  fifty-cent  monthly  payment  about  ten  years  to  mature  its  stock.     In  ten  years  a  member  would  have 

paid  in  $60.(0,  and  the  balance  of  $40.00  would  be  his  profit.     The  money  paid  in  has  been  in  use  an  average  of 

five  years.     It  can  thus  be  seen  that  the  profits  are  large.     It  has  the  further  advantage  of  enabling  a  person  who 

can  save  only  fifty  cents  per  month  to  make  immediate  use  of  it,  and  to  the  best  advantage.   The  profits  are  made 

by  loaning  to  its  members.     A  member,  we  will  say,  owns  a  lot  clear  of  incumbrance,  and  desires  to  build  a  home 

upon  it  costing  about  $1000.00.     He  will  join  an  association,  taking  out  ten  or  more  shares  of  stock,  the  par  value 

of  which  will  be  at  least  $1000.00.     He  applies  for  and  gets  a  loan  from  the  association  for  $1000.00.     For  this  he 

gives  as  security  his  stock  as  a  pledge,  and  a  mortgage  or  trust  deed  on  the  lot.     The  money  will  be  paid  out 

as  the  house  is  built  and  not  before.     For  the  loan  he  will  be  charged  from  6  to  8%  per  annum,  interest  payable 

monthly,  and  a  premium  of  say,  25%.    This  premium  may  be  deducted  in  advance,  and  only  $750.00  paid  him,  or 

as  is  often  the  case,  the  entire  $1000.00  will  be  loaned  him,  and  he  must  return  TJ0  of  the  premium  each  month  for 

one  huudred  months.     One  who  has  borrowed  under  these  conditions  would  pay  to  the  association,  monthly  as 

follows  : 

Dues  on  ten  shares  @  50  cents $5.00 

Interest  on  loan  of  $1000.00  @  6% 5.00 

Premium  T£ff  of  total 2.50 

Total $12.50 

At  the  end  of  about  ten  years  his  stock  should  be  matured,  and  that  will  just  cancel  his  loan  and  his  mortgage 
will  be  released.  Should  it  take  ten  years  to  mature  his  stock  he  has  paid  in  $1,500  but  he  has  had  the  $1000.00 
and  the  use  of  it,  and  has  had  the  privilege  of  paying  off  his  loan  in  monthly  installments. 

In  some  associations  the  rate  of  premium  charged  is  not  fixed,  but  the  members  bid  for  it,  and  the  one  paying 
the  highest  rate  secures  it. 

Provision  is  often  made  that  a  member  may  withdraw  by  giving,  say,  thirty  days'  notice,  and  paying  all  his 
obligations  to  the  association.  In  that  case  he  gets  what  installments  he  has  paid,  and  usually  6%  interest  thereon 
for  the  time  it  was  in  the  association. 

Loans  are  also  made  by  some  associations  on  the  stock  as  a  pledge.  A  member  having  stock  on  which  he 
has  paid  for  several  years  may  pledge  it  to  the  association,  which  will  loan  him  a  certain  per  cent,  of  its  withdrawal 
value. 

Usually  every  three  months  what  is  called  a  new  series  of  stock  is  started.  This  is  to  make  the  association 
a  perpetual  institution,  and  to  place  those  joining  it  at  the  same  time  on  an  equal  footing. 

CURRENCY  CERTIFICATES. 

Conservative  bankers  keep  a  certain  amount  of  cash  always  on  hand  to  meet  any  unusual  demand  that  may 
be  made  upon  them.  To  obviate  the  necessity  of  oounting  this  money  again  and  again,  and  to  settle  balances 
against  them  in  the  clearing  house,  any  legal  tender  currency  may  be  deposited  by  a  bank  in  the  U.  S.  treasury  or 
any  sub-treasury  in  sums  of  $10,000.00,  or  any  multiple  thereof,  and  there  will  be  issued  to  it  currency  certificates 
for  a  like  sum.  They  are  issued  only  in  amounts  of  $10,000.00,  and  are  negotiable  among  banks  by  endorsement. 
The  certificate  contains  the  name  of  the  bank  to  whom  issued,  and  is  signed  by  the  treasurer  and  register  of  the 
treasury,  and  if  issued  from  a  sub-treasury  is  countersigned  by  the  assistant  treasurer.  The  bills  are  engraved  as 
are  other  currency  bills  and  contains  blanks  for  the  name  of  the  bank  to  be  written  in.  If  desired,  the  bank 
depositing  the  legal  tender  currency  may  have  the  identical  currency  deposited,  laid  aside,  to  be  paid  it  or  its 
endorsee  on  presentation  of  the  certificate. 

These  certificates  are  only  used  by  the  large  banks  in  the  larger  cities. 

CLEARING  HOUSE  CERTIFICATES. 

In  times  of  business  depression  it  is  often  the  case  that  depositors  become  suspicious  of  the  financial  reli- 
ability of  their  bank.  Thus  in  1893,  though  in  most  cases  without  foundation,  the  confidence  of  the  people  in  the 
banks  was  shaken,  and  many  depositors  rushed  to  their  banks  to  withdraw  their  deposits,  thus  making  what  is 
called  "  a  run  on  the  bank  "  Few,  if  any  banks  keep  on  hand  an  amount  of  cash  sufficient  to  pay  all  of  their 
depositors  in  full,  for  a  portion  of  these  deposits  must  be  loaned  to  meet  the  expense  of  caring  for  the  depositors' 
accounts.  When  the  bank  is  unable  to  pay  its  checks  on  demand  it  must  close  its  doors.  The  failure  of  one  bank 
causes  loss  of  confidence  in  banks  in  general.  In  such  times  the  clearing  house  may  pass  a  resolution  permitting 
any  member  to  bring  in  its  securities  and  collaterals  on  which  it  has  loaned,  and  in  their  stead  the  clearing  house 


32  HOW  BUSINESS  IS  DONE. 

will  issue  to  it  clearing  house  certificates.  These  certificates  cannot  of  course  be  used  in  paying  checks  over  the 
counter,  but  they  can  be  used  in  payment  of  the  daily  clearing  house  balances.  Not  a  few  of  a  bank's  checks 
come  through  the  clearing  house,  and  the  certificates  enable  the  bank  to  make  use  of  its  entire  capital  tq  meet 
current  demands. 

LETTER  OF  CREDIT. 

A  person  going  abroad  will  not  desire  to  carry  on  his  person  in  coin  the  amount  he  will  need  to  meet  the 
expenses  of  his  trip.  He  does  not  know  just  where  aud  when  he  will  need  a  certain  amount.  Evidently  some 
instrument  calling  for  money  at  all  of  the  places  he  will  visit,  and  requiring  his  endorsement  to  negotiate  it  would 
be  desirable.  To  meet  this  demand  large  city  banks  issue  letters  of  credit,  payable  in  all  the  large  cities  of  Europe. 
On  the  back  of  the  letter  is  a  list  of  the  banks  where  money  can  be  drawn  upon  it.  The  tourist  pays  his  money 
to  his  banker  here  and  takes  his  letter.  Arriving  in  London  he  is  in  need  of  50^.  He  enters  the  bank  of  the 
London  correspondent  named  on  the  back  of  the  letter,  and  draws  his  draft  on  the  bank  issuing  the  letter,  and  in 

Letter  of  Credit. 


mm 

Gfo    ^39.  qfaLaf,.      May  16.     y^U 


WMtomtn 


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Martin  Beem,~~ ~ „,  w/^ 

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Fwe  Hundred ffiowt&s  Sterling, 

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favor  of  the  London  bank.     (Ju  this  draft  the  London  bank  gives  him  the  money  and  endorses  on  the  back  of  the 
letter  the  amount  paid  on  it.     The  letter  thus  shows  at  all  times  the  amount  due  on  it. 

TRAVELERS'  CHEQUES. 

The  American  Express  Company  issue  travelers'  cheques  which  are  designed  to  be  used  by  travelers  the  same 
as  money.  They  are  issued  in  denominations  of  $10,  $20,  $50,  $100  and  $200,  with  the  exact  equivalent  of  money 
in  the  principal  countries  of  Europe  printed  on  the  cheque.  These  cheques  can  be  used  as  money  and  are  accepted 
by  steamship  companies,  hotels,  etc.  without  discount.  A  cheque  not  used  will  be  redeemed  by  the  company 
The  rates  charged,  if  for  use  in  foreign  countries,  is  one-half  of  one  per  cent.  They  also  issue  a  "Travelers'  cheque 
credit;"  by  this  means  any  quantity  of  money  up  to  the  amount  of  the  cheque  can  be  obtained  in  the  principal 
cities  of  Europe. 


HOW   BUSINESS   IS   DONE. 


33 


Traveler's  Chko.it*. 


is  uracil  untss  cavur. 


\  ■  ■  ■'  bsHiEESsEsej 


GgMaz^ 


7*£sa 


EXPRESS  MONEY  ORDERS. 

All  the  express  companies  issue  money  orders  payable  in  the  United  States  and  a  few  of  them  issue  orders 
that  are  payable  at  certain  places  in  foreign  countries.  The  method  of  purchasing  these  orders  is  very  simple. 
Give  the  agent  your  name  and  the  name  and  address  of  the  party  to  whom  you  wish  the  order  payable  and  upon 
receipt  of  the  value  of  the  order  and  the  charges  he  will  issue  to  you  the  order  and  a  receipt  for  it.  This  receipt 
you  should  preserve,  for  in  case  the  order  itself  is  lost  you  can  secure  the  return  of  its  value  on  presentation  of  the 
receipt  and  the  execution  of  an  indemnity  bond.  No  order  is  issued  for  more  than  fifty  dollars.  If  it  is  de- 
sired to  send  more  than  fifty  dollars,  more  than  one  order  must  be  purchased.  The  ease,  simplicity  and  safety 
with  which  the  express  companies  handle  this  business  has  compelled  the  Post  Office  department  to  abandon  its 
old  system  of  orders  and  adopt  one  similar  to  that  of  the  express  companies.  The  charges  for  express  orders 
are  as  follows  : 

Not  over  |  5.00.. 5  cts. 

Notover    10.00.! 8   " 

Notover    20.00 10   " 

Notover    30.00 12   " 

Notover    40.00 15   " 

Notover    50.00 ...18   " 

Notover    60.00 20   " 

Notover   75.00 25   " 

Notover  100.00 30    V 

The  orders  issued  by  the  different  companies  vary  somewhat  in  form  but  they  are  substantially  the 
same.  They  can  of  course  be  deposited  in  the  bank  the  same  as  other  vouchers.  They  can  when  received 
be  re-sent  and  banks  everywhere  accept  them  from  depositors  without  discount.  The  payee  should  endorse 
an  express  order  before  depositing  it.  The  United  States  and  American  Express  Companies  sell  order  books 
containing  5,  10,  20  or  50  orders,  so  arranged  that  the  purchaser  may  himself  issue  an  order  for  an  amount 
from  $1.00  to  $50.00.  On  the  left  end  of  the  order  will  be  noticed  the  means  used  to  prevent  the  raising 
of  the  order.  The  order  is  so  torn  as  to  show  the  amount.  This  system  is  now  used  by  the  U.  S.  on  their 
postal  orders.  These  orders  are  often  made  use  of  by  people  having  no  bank  account.  Money  can  thus 
be  sent  from  one  side  of  town  to  the  other  when  a  check  would  be  used  if  the  sender  had  a  bank  account. 


National  Express  Co.'s  Money  Order. 


KATIOKM.  EXPRESS   CO. 
MONCV   OROCM. 

REMITTERS   RECEIPT. 
keep  IT 


AMOUNT  Of  OROU. 
tfClMdt.    |  fOTig*.. 


¥(• 


''   1 


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to   «Mm   NsfunO    of   mmwmI  «l 
Ortf  «r  *  totl. 
*  •lank  »»«c*a  ibovt  w*  N» 

ft****  m  I  nk  ,  w>n  •r*v«M  tntidvlMt 

r«fv«d  ikowrd  I'm  RtMip/b*  '«•'. 


34 


HOW   BUSINESS   IS   DONE. 


American  Express  Co.'s  Money  Order. 


gmrnm0^fm0m^^ 


F^MONEYi    ORDER 


as  per  conditions  hereon 


DOLURS.  j 

^6] 


<J\3 


fUNCC.  MlCjum,  5WiTii.il 

-»«JJW 

E9ae 

i?-c"ai£ 

isvcs 

QkS» 

•""*"-- 

J?rr.£2 

MAM 

,.™t»= 

oe«M.««. 

•  » 

»JJ  c~t»  r* 

KMW 

xtz;~- 

""*""-**""".'?yj 

I   miff"   and    by 
tharaef  mada  payaMa  M  the  art: 


MLV  ST  AUTHORITY  Ot  TMC  TrCAAWRCR  OT  TM«  Com. 
Orda»a  p./.bi.  in  Europ*  wiN  b.  c.th.d  at  vta  loratcn 
amathar  aweb  coa™  an  by  th*  tctni 


Payable  in- 


By- 


AMERICAN  EXPRESS  Ok 

MONCV   OftOKH. 


REMITTER'S    RECEIPT. 

KEEP   IT 


I  _ 

I  AMOUNT  or  ORDCR. 

I    V.  t.  a.  Canada.   I  Faraig*. 


.     «y     Zfc'    ^     & 


'tze^fu 


Ord*r  'f  io»t- 

Blank  ftpactM  • 
uh  Of  ft«mitt«r*  -n« 


*  United  States  Express  Co.'s  Money  Order. 


J  833850 


j  833850 

■i-jggwggrggg^- 

MONEY  ORDER. 

REMITTER'S    RECEIPT 
K^T. 


->jiAfTERTHR>t  M0"JTTH5  FROM  DATE,  THIS  %*WtY  gRDER  Will  BE  PAID  ONIY  BORDER  OF  THE  SUPERINTENDENT  OF  THE  MONEY  ORDER  OEPT  ij<- 

Any  erasure,  alteration  ormutilation  of  this  Order  renders  it  Voio 


^fL/^^iv#*^bw 

«^L«dfcyj|__^/*  I89.6 

REMITTER  WILL  KEEP  THIS 
RECEIPT  TO  SECURE  REFUND 
OF  AMOUNT  OF  ORDER  IFLOST. 
BLANK  SPACES  ARE  FOR 
USE  OF  REMITTER.  ANDW1TH 
HIS  SIGNATURE  IN  1NK.WILL 
PREVENT  FRAUDULENT  RE' 
ruND  SHOULD  TMJS  RECEIPT 
BE  LOST 


*  This  order  when  issued  would  be  so  torn  off  on  the  left  hand  side  from  the  stub  as  to  show  only  "not  payable 
for  more  than  five  dollars." 

ABOUT  REGISTERED  LETTERS. 

To  register  a  letter  or  package  it  should  be  plainly  addressed  and  also  have  on  it  the  name  and  address  of 
the  sender  so  that  if  it  cannot  be  delivered  it  may  be  returned  in  thirty  days.  Present  the  letter  or  package 
properly  addressed  to  any  Post  Office  for  all  Post  Offices  are  registered  offices  and  request  it  to  be  registered.  The 
fee  is  eight  cents  in  addition  to  lawful  postage  and  must  invariably  be  prepaid.  The  postmaster  receiving  a  registered 
package  issues  a  receipt  for  it  and  each  clerk  who  handles  it  in  course  of  transmission  receipts  for  it  to  the  one 
from  whom  he  receives  it.  In  this  manner  it  can  be  traced  in  case  of  loss.  The  government  takes  every  precaution 
possible  to  guard  the  safety  of  registered  matter,  but  it  does  not  absolutely  insure  it  and  in  case  the  package  is  lost 
through  fire,  theft  or  otherwise  it  will  not  re  imburse  the  loser.  When  the  package  is  delivered  the  receiver  signs 
two  receipts,  one  on  a  card  which  is  returned  to  the  sender  and  the  other  on  a  slip  of  paper  which  is  retained  by 
the  department.  Both  receipts  must  be  signed  in  ink  and  not  in  pencil.  In  case  the  letter  or  package  is  receipted 
for  by  some  one  other  than  the  addressee  he  must  first  sign  the  name  of  the  addressee  and  then  his  own  name. 


POSTAL  MONEY  ORDERS. 

A  postal  money  order  is  a -draft  drawn  by  one  postmaster  on  another  at  a  distant  place.  The  orders  are 
numbered  and  a  private  letter  of  advice,  giving  full  particulars  as  to  number,  amount,  name  of  remitter  and 
of  payee,  is  mailed  by  the  postmaster  who  issues,  to  the  postmaster  on  whom  the  order  is  drawn.  The  order 
will  not  be  paid  until  the  letter  of  advice  is  received.  When  the  order  is  presented  it  must  correspond  with 
the  letter  of  advice.  To  obtain  a  postal  order  the  sender  must  fill  out  an  application  on  a  blank  furnished 
him  by  the  office.  The  payee  must  be  identified  before  the  amount  of  the  order  will  be  paid  to  him.  Postal 
orders  are  issued  for  cash  only.  Not  even  certified  checks  are  accepted.  To  deposit  a  postal  order  in  a  bank, 
sign  the  receipt  on  the  face  and  do  not  endorse  it  to  the  bank,  for  to  obtain  the  money  thereon,  they  would  be 
obliged  to  sign  the  receipt.  In  case  they  received,  as  thev  do,  a  large  number  of  them  daily,  it  would  entail  a 
vast  amount  of  labor  on  them. 

At  the  top  of  page  35  are  shown  the  face  and  back  of  the  application  which  must  be  filled  out  by  one 
desiring  to  purchase  a  money  order  for  remittance  to  any  part  of  the  United  States. 


HOW     BUSINESS     IS     DONE 


35 


Face  of  Application 

Stamp  if  iiulni  Offlci 


Cents 


The  Postmaster 
will  insert 


(Form  No.  6001) 


NO. 


the  office  drawn  on,  when  the  office  named   by  the  remitter  in  the  body  ol 
this  application  is  not  a  Money  Order  Office. 

Spaces  above  this  line  are  for  the  Postmaster's  record,  to  be  filled  in  by  him. 


Application   for   Domestic  Money  Order 


Spaces  below  to  be  filled  in  by  purchaser,  or,  if  necessary, 
by  another  person  for  him 


Amount 


Pay  to      I 
Order  of    \ 


_ Dollars  Cents 

(Name  of  person  or  firm  for  whom  order  is  intended) 


Whose 
Address 

is 

Post      ? 
Office    5 


)    No 


State 


Sent  by 


(Name  of  Sender) 


Address  ) 

sender  )      No Street 

PURCHASER   MUST   SEND   ORDER   (ON   BLUE   PAPER)   TO   PAYEE 


Back  of  Application 

Fees  for  Money  Orders  drawn  on 
Domestic  Form 

Payable  in  the  United  States  (which  includes  Hawaii 
and  Porto  Rico)  and  its  possessions  comprising  the  Canal 
Zone  (Isthmus  of  Panama).  Guam,  the  Philippines  and 
Tutuila,  Samoa;  also  for  Orders  payable  in  Bermuda,  British 
Guiana,  British  Honduras,  Canada,  Cuba,  Newfoundland,  the 
United  States  Postal  Agency  at  Shanghai  (China),  the 
Bahama  Islands,  and  certain  other  Islands  in  the  West  Indies 
mentioned  in  Resigter  of  Money  Order  Post  Offices. 

For  Orders  From  $  0.01  to  S     2.50  3  cents. 

From  S  2.51  to  S    5.00  5  cents. 

From  S  5.01  to  S  10.00  8  cents. 

From  $10.01  to  S  20v00  10  cents. 

From  $20.01  to  $  30.00  12  cents. 

From  $30.01  to  $  40.00  15  cents. 

From  $40.01  to  $  50.00  18  cents. 

From  $50.01  to  $  60.00  20  cents. 

From  $60.01  to  $  75.00  25  cents. 

From  $75.01  to  $100.00  30  cents. 

Memoranda  of  Issuing  Postmaster: 

Note. — The  maximum  amount  for  which  a  single  Money  Order  may 
be  issued  is  $100.  When  a  larger  sum  is  to  be  sent  additional  Orders 
must  be  obtained.  Any  number  of  Orders  may  be  drawn  on  any  Money 
Order  Office;  but  if  Orders  are  drawn  in  excess  of  $200  on  any  one  day 
upon  an  office  of  the  4th  class,  notice  of  the  fact  by  letter  (or  Form 
6037)  is  to  be  promptly  sent  the  Department  by  the  issuing  Postmaster 
so  that  provision  may  be  made  for  payment. 

Applications  must  be  preserved  at  the  office  of  issue  for  four  years 
from  date  of  issue. 

(Edition  Jan.,  1909.) 


Not  all  post  offices  are  "Money  Order  offices  ;  "  only  offices  doing  a  considerable  business  would  be  likely 
to  have  funds  on  hand  sufficient  to  meet  these  orders  on  demand.  But  one  endorsement  of  an  order  is  permitted 
by  law.  An  order  being  lost  or  destroyed,  a  duplicate  may  be  obtained  by  either  the  sender  or  payee.  Orders 
must  be  presented  within  one  year  from  the  date  of  issue.  After  that  time  a  duplicate  must  be  obtained.  To 
avoid  carrying  money  travelers  often  purchase  postal  orders  on  other  cities  and  have  them  drawn  payable  to  them- 
selves. The  department  also  issues  international  orders,  that  is,  orders  on  the  post-offices  in  foreign  countries. 
The  rates  are  as  follows  : 

$10.00  or  less 10  cts. 

Over  $10.00  and  not  exceeding  $20. 00 20    " 

"      20.00        "  "  30.00 30    " 

"      30.00        "  "  40.00 40    " 

And  so  on  to  $100. 

Orders  are  not  drawn  on  Great  Britain  for  more  than  $50.00. 


EXPRESS  COMPANIES. 

There  are  four  large  express  companies  who  do  the  bulk  of  the  express  business  of  this  country.  There 
are  also  five  smaller  companies  that  do  a  considerable  business.  An  express  company  makes  a  contract  with  a 
railroad  company  for  the  express  privileges  of  the  road  for  a  certain  time,  and  for  this  pays  a  certain  sum.  Owing 
to  the  rapidity  with  which  goods  are  transported  in  this  manner,  and  to  the  responsibility  of  the  companies  and 
their  promptness  in  delivery,  it  has  grown  to  be  a  popular  means  of  transportation,  and  higher  rates  are  willingly 
paid  than  for  the  slower  means  of  freight.  In  the  larger  towns  express  matter  is  delivered  at  the  consignee's 
place  of  business.  This  of  itself  is  an  advantage  over  shipments  by  freight,  for  the  railroads  deliver  at  their 
warehouses. 

Iu  addition  to  transporting  merchandise  and  valuables  the  express  companies  issue  money  orders,  collect 
drafts,  act  as  agent  for  the  purchase  of  goods,  distribute  advertising  matter,  carry  deeds  and  mortgages,  delivering 
the  same  on  receipt  of  a  certain  amount ;  in  fact,  they  make  themselves  almost  indispensable  to  the  business 
community. 


36 


HOW   BUSINESS    IS    DONE. 


COST  OF  SHIPPING  MERCHANDISE  BY  EXPRESS. 

It  is  often  desirable  to  know  in  advance  the  cost  of  shipping  a  certain  article  by  express.  If  it  is  an  article 
of  merchandise  it  is  easily  ascertained.  As  has  been  said,  each  express  company  publishes  a  rate  book.  This  book 
gives  a  list  of  all  the  towns  on  its  lines,  together  with  the  rate  per  hundred  on  merchandise  to  that  point.  Less 
than  one  hundred  pounds  will  be  proportionately  more  but  if  it  be  less  than  one  hundred  pounds  the  rate  is  graded 
according  to  a  scale  which  is  also  given  in  each  rate  book.     This  scale  is  as  follows  : 

Graduated  Table  of  Rates. 


WHEN  RATE  IS  re- 

.40 

.50 

.60 

.75 

l.OO 

1.25 

1.50 

1.75 

2.00    j    3.50 

3.00 

3.SO 

4.00    j    4.50 

packages  not  over. . . 

lib 

M 

lib 

M 

lib 

25 

lib 

25 

lib 

25 

lib.  85 

1  lb.  25 

1  lb:'25 

1  lb.  25!    1  lb.  25 

1  lb.  25 

lib.  25 

1  lb.  25]    1  lb.  » 

Orerllb.    " 

a 

25 

a 

2.1 

25 

2 

25 

2 

25 

2 

25 

2 

25 

2 

25 

2 

25     2        3d 

2        81 

2        80 

301  a     so 

a 

3 

M 

3 

25 

3 

H 

3 

25 

3 

30 

3 

M 

3 

31 

3 

■ 

;« 

40    3        45 

3        45 

3        45 

.1 

45    3        46 

3 

4 

•.','. 

4 

25 

4 

'.'. 

4 

31 

4 

31 : 

4 

3( 

4 

M 

4 

41 

4 

451   4       50 

4        55 

4        60 

4 

60    4       60 

4          "       ... 

5 

H 

5 

25 

5 

H 

5 

30 

5 

35 

5 

4( 

5 

M 

5 

11 

r> 

50     5        51 

5        65 

5       65 

5 

85    5       70 

5         "       ... 

7 

25 

7 

HI. 

7 

:i< 

7 

35 

7 

35 

7 

40 

7 

45 

7 

K 

7 

68     7        65     7         7C 

7       75 

7 

75    7       88 

7         "       ... 

lO 

2.5 

lO 

» 

lO 

.•(i 

to 

35 

lO 

41 

lO 

It 

lO 

51 

lO 

OHIO 

601O        75ilO        75 

lO        901O 

90  lO      100 

lO         "       ... 

15 

H 

15 

;i:> 

15 

id 

15 

35 

15 

41 

15 

■ 

15 

«( 

15 

ill 

70115        80115        85 

15      10015 

100  15      110 

15         "       ... 

20 

2r, 

20 

:« 

20 

:ii. 

20 

35 

ao 

45 

ao 

■ 

20 

65 

20 

70.20 

802O       902O      IOC 

20      U5.20 

113  20      126 

ao 

25 
30 

25 

N 

25 
30 

35 
35 

25 
30 

35 
35 

25 
30 

40 
45 

35 

30 

50 
55 

as 

30 

60 
M 

25 
30 

70 

75 

25 
30 

75125 
HUM 

9025      10025      110 
100  30      110I3O      125 

25       125  25 
30      145:30 

130  25      150 

25          "        ... 

150i3O      160 

30 

35 

81 

35 

44 

35 

4i: 

35 

45 

35 

N 

35 

71 

3ft 

HO 

35 

90,(15 

10(1 

35      12035       135 

35      15035 

160 

35       180 

35 

40 

80 

40 

44 

40 

40 

40 

ni; 

40 

6l. 

40 

Tfl 

46 

M 

40 

100  40 

1IK 

40       125  lO       145 

40      16540 

m 

40      200 

40          -       ... 

45 

Ml 

45 

40 

45 

41: 

45 

H 

45 

65 

45 

■ 

45 

(to 

45 

10045 

toe 

45      12545      150 

45      17545 

2.X 

4S      225 

45          "       .... 

50 

Ml. 

SO 

4.'i 

80 

45 

50 

.55 

50 

70 

50 

H 

SO 

100 

00 

100  50 

101 

50      125  SO      150 

SO      17550 

M 

SO      225 

50         -       ... 

55 

ao 

n 

sr, 

55 
60 

45 

.10 

55 
60 

50 

55 

55 
60 

60 
65 

55 
60 

75 
80 

55 

00 

100 

no 

55 
60 

110 
115 

55 
60 

110 
120 

55         -       ... 

6©         -       ... 

65 

M 

65 

ltd 

65 

■ 

65 

TO 

65 

M 

65 

us 

65 

125 

65 

130 

When  the  rate  per   lOO  lbs.   Is  $2.00  or 

65          -       ... 

70 

35 

70 

mi 

70 

X 

70 

75 

70 

SO 

70 

125 

70 

135 

70 

140        more,  charge   pound   rates  for  50   lbs.  or 

over.     But  the 

lO         -       ... 

75 

40 

75 

no 

75 

60 

75 

75 

75 

100 

75 

125 

75 

151. 

7ft 

ght  must   not 

75 

80 

4(1 

86 

H 

80 

m 

80 

75 

80 

1  .11 

80 

125 

80 

150 

80 

loo;    i 

80         ••       ... 

85 

411 

85 

■e 

85 

m 

85 

75 

85 

85 

125 

85 

150 

8S 

170       ** 

85         -       ... 

100 

« 

lOO 

60 

too 

60 

lOO 

75 

lOO 

KM 

lOO 

125 

lOO 

150 

lOO 

175 

If  less  than  $2.00  per  100  lbs.,  charge  graduated   rates. 

If  the  rate  per  hundred  be  $3.50  look  in  the  column  in  the  scale  headed  $2.50,  then  down  in  that  column  to 
the  weight  of  the  package  opposite  this  will  be  found  the  rate. 
The  rate  per  hundred  for  merchandise  is  from  Chicago  to 


Atlanta,  Ga $3.75 

Atchison,  Kan 2.00 

Augusta,  Ga 4  75 

Augusta,  Me 3.00 

Albany,  N.  Y 2.25 

Austin,  Tex 5.50 

Bowling  Green,  Ky 2  50 

Baltimore,  Md 2.25 

Boston,  Mass 2.50 

Cairo,  111 2  00 

Columbus,  0 150 

Cincinnati,  0 1.50 

Cleveland,  0 1.50 

Denver,  Col 6.00 

Des  Moines,  la 1.75 

Davenport,  la 1.25 

Detroit,  Mich, 1.25 

Dallas,  Tex 4.25 

Evansville,  Ind 1.75 

Ft.  Scott,  Kan 2  75 

Galveston,  Tex 5.50 

Grand  Forks,  N.  D 4  25 

Hartford,  Conn 3.00 

Hutchinson,  Kan 3.75 


Indianapolis,  Ind $1.25 

Jacksonville,  Fla 5.00 

Kansas  City,  Mo 2.00 

Lincoln,  Neb 2.75 

Milwaukee,  Wis  0.60 

New  Orleans,  La 4.25 

Newark,  N.  J 2.50 

Omaha,  Neb 2  00 

Portland,  Me  3.00 

Peoria,  111  1.00 

Philadelphia,  Pa       ....2.25 

Pittsburg,  Pa 1  75 

Providence,  R.  1 2.50 

Springfield,  Mass 2  50 

St.  Paul,  Minn 2.00 

Springfield,  111 1.00 

Sioux  City,  la 2.00 

Scranton,  Pa '. 2.50 

Salem,  Mass 2.25 

Topeka,  Kan, 2.75 

Toledo,  0 1.25 

Wilmington,  Del 2.25 

Wheeling,  W.  Va 1.75 

Washingtcn,  D.  C 2.25 


The  above  are  the  rates  on  merchandise,  if  the  goods  are  bulky,  difficult  to  handle,  or  the  risk  be  great,  ,» 
rate  and  one-half  or  double  rate  may  be  charged. 

HOW  TO  SHIP  BY  EXPRESS. 

Often  one  of  the  duties  of  an  office  apprentice  is  to  attend  to  the  shipping  by  express.  It  is  therefore  some- 
thing that  should  be  thoroughly  understood  by  all.  The  smaller  towns  having  only  one  railroad  will  probably 
have  but  one  express  company,  the  one  having  the  franchise  on  that  railroad.  In  the  larger  cities  all  the  com- 
panies will  be  represented.  When  shipping  from  a  town  having  but  one  company  you  must  of  course  ship  by 
that  company,  no  matter  if  the  destination  be  on  another  company's  line.  In  this  case  the  first  company  will  at 
some  junction  point  turn  the  package  over  to  the  second  company,  who  will  deliver  it.  In  the  larger  cities  where 
the  companies  are  all  represented  no  company  will  accept  the  shipment  except  it  be  also  represented  at  the  des- 


HOW   BUSINESS   IS   DONK. 


37 


Copy  of  C.  O.  D.  Envelope. 

American  Express  Co. 


From 


Collection. 
rCh's  for  Return  of  Money. 
Total  Am't  to  be  Returned. 


<?^zfi*/s>S^s4s 


CHICAGO,  ILLS., 

On 


c^h^yy 


.18. 


<7Ajyir^ 


tination.  You  must  then  be  able  to  determine  what  company  or  companies  are  represented  at  the  destination 
points.  If  two  or  more  are  represented  shipment  can  be  made  by  any  of  them  ;  if  but  one,  then  by  that  one. 
Shippers'  guides  are  published  and  will  be  found  in  the  offices  doing  much  shipping.  These  give  among  other 
things  the  name  of  the  company  represented  in  every  town  in  the  country.  Each  express  company  also  publishes 
and  distributes  to  its  patrons  free  of  charge  a  "Rate  Book"  giving  alphabetically  by  states  the  name  of  every  town 
10  which  it  is  represented.  Look  through  the  rate  book  of  each  company  until  one  be  found  containing  the  name 
of  the  point  of  destination.  If  you  are  not  a  regular  shipper  and  do  not  have  a  receipt  book  the  agent  will  write 
you  a  receipt  on  request,  and  in  case  of  loss  or  damage  to  the  goods  it  would  be  well  to  have  it. 

Having  ascertained  the  company  by  which  you  can 
make  the  shipment,  fill  out  in  their  receipt  book  a  blank 
receipt  for  the  package,  leaving  the  column  for  the 
signature  blank.  The  company  furnishes  these  receipt 
books  to  its  patrons  free  of  charge.  It  also  furnishes  a 
'  'Call  Card"  which  should  now  be  hung  out  in  a  previously 
agreed  upon  place,  where  it  can  easily  be  seen  from  the 
street  by  the  collector,  who  will  call  on  his  rounds  for  the 
package.  The  package  should  be  ready  for  instant  delivery 
and  the  receipt  book  ready  for  his  signature.  If  the  ex- 
press is  to  be  prepaid  the  package  should  be  so  marked  ; 
also  so  signified  in  the  receipt  book.  In  this  event  the 
collector  will  take  up  the  receipt  book,  and  on  the  follow- 
ing day,  when  the  charges  have  been  determined,  a  col- 
lector will  return  the  receipt  book  and  collect  the  charges. 

C.  O.  D.  BY  EXPRESS. 

A  package  to  be  sent  C.  O.  D.  by  express  must  be 

plainly  marked  on  the  wrapper  C.  O.  D.  $ and  the 

receipt  book  should  also  be  marked.  Two  bills  or  invoices 
of  the  goods  should  be  made  out.  Mark  one  Duplicate 
and  send  it  by  letter  to  the  consignee.  Enclose  the  other 
in  a  C.  O.  D.  envelope,  which  will  be  furnished  you#  by 
the  company,  and  which  should  be  delivered  with  blanks 
properly  filled  out  to-the  collector  along  with  the  package. 
The  envelope  is  self-explaining  as  to  what  blanks  should 
be  filled  out.  If  you  desire  the  consignee  to  also  pay  the 
cost  of  returning  the  money  to  you,  write  "Collect"  in 
remark  space  at  bottom  of  envelope,  otherwise  you  must 
pay  it  when  delivered  to  you.  This  is  a  very  reliable  and 
convenient  method  of  transporting  goods,  for  the  goods 
will  not  be  delivered  until  paid  for,  and  if  not  taken  at  all 
they  will  be  returned  to  you. 

The  object  of  sending  goods  C.  O.  D.,  is  that  the 
consignor  may  be  sure  of  getting  his  money  before  he  is 
obliged  to  deli\  er  the  goods.  The  express  companies  are 
in  this  case  both  carriers  and  collectors.  Privilege  of 
examining  the  goods  before  paying  for  them  may  be  given 
the  cor/signee,  but  this  privilege  will  not  be  given  by 
the  company,  until  requested  to  do  by  the  consignor.  The 
shipper  must  sign  the  request  and  it  must  be  endorsed 
by  the  agent  at  the  point  of  shipment.  The  request  also 
releases  the  company  from  all  losses  incidental  to  such 
e-amination. 


C.  O.  D. 


Billed  to 


Collect  and  Bet  urn  to 


INSTRUCTIONS  TO  AGENTS. 

BILL  INCLOSED  IS  TO  BE  COLLECTED  ON  DELIVERY  OF  GOODS. 

WRetnm  proceeds  with  this  Envelope,  stitched  wlUi  twine  and  well 
•euled  with  wax,  by  first  express  lifter  payment. 

Do  not  deliver  the  goods  accompanying  this  bill  until  you  receive  the 
pay  therefor,  or  are  ordered  in  whiting  to  the  contrary  by  the  shipper- 
and  such  order  endorsed  by  the  office  making  the  shipment 

Be  careful  to  notice  what  money  joo  receive  and  as  far  as  practicable, 
•end  forward  the  same  that  is  collected.  Examine  the  invoice  enclosed,  and 
follow  tbx  special  inrtbcctions  or  the  SHippxBs,  if  any  are  given  on 
Hi"  bills. 

If  goods  are  refused,  or  the  partlescannot  be  found,  notify  the'office 
from  whence  received,  within  one  week,  with  names  and  dates,  and  await 
further  Instructions. 

Perishable  property,  snch  as  Oysters.  Fish.  Fresh  Meats,  Fruits,  Llvo 
Poultry,  4c.,  If  refused  by  consignees,  sell  immediately  to  best  advantage 
for  account  of  owner. 

NOTICE  TO  SHIPPERS. 

i  — 

If  the  money  to  be  collected  from  the  consignee  on  dellveiycf  the 
property  described  herein  is  not  paid  within  thirty  days  rrom  the  date 
hereof,  the  shipper  agrees  that  this  Company  may  return  said  property  to 
him  at  the  expiration  of  that  time,  subject  to  the  conditions  ol  its  receipt 
lor  the  shipment,  that  he  will  pay  the  charges  for  transportation  both 
ways,  and  that  the  liability  of  this  Company  for  such  property,  while  In 
their  ponesslon,  for  the  purpose  of  making  such  collections,  ahull  be  that 
of  warehousemen  only. 

^pr-  RS)MA.XtX.S. 

67  ■■ 


SENDING  MONEY  BY  EXPRESS. 

Money  to  be  sent  by  express  should  be  enclosed  iu  an  euvelope  furnished  by  the  company.  The  consignee 
must  place  the  money  in  the  envelope  himself  for  the  agent  is  not  permitted  to  address  the  envelope,  nor  handle 
or  count  the  money.  The  company  seem  content  to  take  L'S  word  for  the  contents.  The  agent  will  seal  the 
package  with  waxen  seals  so  that  it  cannot  be  tampered  with  without  breaking  a  seal.  Each  clerk  through  whose 
hands  it  goes  receipts  for  it  so  that  in  case  of  loss  it  can  easily  be  traced.  The  charges  for  sending  money  in  this 
manner  depends  on  the  amount  ind  on  the  distance  it  is  to  be  sent.  The  larger  the  amount  the  greater  their  risk, 
and  the  longer  the  distance  the  greater  the  labor  and  cost  of  transporting. 


38 


HOW   BUSINESS   IS   DONE. 


Envelope  for  Money. 


MONEY  ORDERS 

are  sold  at  all  Agencies  of  this 
Company  In  the  United  States 
and  Canada,  for  any  amount 
and  without  tin:  formal  applica- 
tion Incident  to  the  use  of  other 
forms  of  Money  Orders. 

Cashed  at  oyer  20,000  places 

.throughout  the  world. 

Accepted  on  deposit  by  Banks 
and  Bankers  and  received  by 
Merchants,  Hotels,  Railroad 
Companies  and  all  classes  of  the 
Business  public. 

Ad  absolute  and  positive 
security  against  loss  In  the  re- 
mittance of  money  through  the 
mails,  as  a  receipt  is  given  Remit- 
ter which  will  insure  a  refund. 


American  Express  Company. 

From    CHICAGO,    state  of   ILL. 


100 

Jan.  1804. 


Contents  NOT  COUNTED  by  Agent 
and    ENVELOPS    SEALED    IN 
PRESENCE. 


TO  SHIPPER  :  Agents  of  the  AM.  EX.  CO.  ABE  FOR- 
BIDDEN TO  COUNT  THE  CONTENTS  OP  OB  TO  ADDBES8 
THIS  ENVELOPE. 

SHIPPEB  must  ENTER  HEBEON  the  EXACT  AMOUNT 
ENCLOSED.  FULLY  ADDBESS  the  envelope.  SIGN  HIS 
NAME  In  space  provided  for  that  purpose.  AND  OUM 
DOWN  THE  FLAP. 


SHIPPEB  MU8T  SEAL  THE  ENVELOPE  with  his 
PBIVATE  SEAL  or  the  COMPANY'S  OFFICE  8EAL. 

Coin  must  not  be  enclosed  In  this  envelope  In  excess  or 
SB  IN  SILVEB  or  S26  IN  GOLD,  which  amounts  must  first 
be  placed  In  a  e  nailer  envelope  and  securely  sealed 
before  enclosing  in  this.  LABOEB  AMOUNTS  MUST 
BE  BAOOED. 


In  general  the  cost  of  transporting  $1,000.00  in  currency  is  about  one  half  of  the  cost  of  transporting  one 
hundred  pounds  of  merchandise  over  the  same  route.  The  rate  for  $1,000.00  face  value  of  silver  is  the  same  as  the 
rate  on  one  hundred  pounds  of  merchandise  to  the  same  point,  but  never  less  than  $1.00  per  $1,000.00.  Bankers 
who  ship  large  amounts  of  currency  and  coin  get  a  special  rate. 

SHIPPING  BY  FREIGHT. 

One  of  the  purposes  for  which  railroads  exist  is  the  transportation  of  freight.  The  railroad  company's 
bill  for  this  service  is  known  as  an  "Expense  bill." 

It  is  immaterial  to  the  railroad  whether  the  charges  on  freight  are  paid  at  one  end  of  the  line  or  the 
other,  except  .when  the  value  of  the  goods  shipped  is  less  than  the  amount  of  the  freight  charges,  in  which 
case  the  charges  must  be  paid  or  guaranteed  by  the  shipper,  or  some  other  responsible  person,  before  the 
goods  start.     The  expense  bill  is  receipted  by  the  agent  and  delivered  to  the  consignor  or  consignee,  whoever 


Expense  Bill 


^oCHICAGO,  MILWAUKEE  &ST.PAUL  RAILWAY  C0.,Dr. 


Transferred  from  Car  Xo. 
Received  Payment, 


HOW     BUSINESS     IS     DONE 


39 


pays  the  charges,  as  a  simple  receipt  for  the  money,  just  as  any  merchant  would  receipt  an  invoice  or  state- 
ment and  deliver  it  to  the  purchaser  on  payment  of  the  cash. 

The  railroad  freight  department  does  a  cash  business.  Xo  goods  will  be  delivered  except  for  cash  or 
ujK>n  a  responsible  guarantee  that  the  cash  will  be  paid  at  once.  This  guarantee  is  often  made  by  draymen 
and  expressmen  who  make  a  business  of  delivering  freight,  collecting  at  the  place  of  business  of  the  consignee 
instead  of  at  the  freight  office. 

Prepaid  Freight.     Advanced  Charges. 

If  the  shipper  wishes  to  pay  the  freight  charges,  he  may  pay  the  amount  to  the  freight  agent  at  point 
of  starting.  The  shipment  will  then  be  marked  "Prepaid"  or  "Charges  paid"  and  no  collection  made  at 
the  destination  point.  Some  firms  which  sell  goods  F.  O.  B.  purchaser's  location,  however,  prefer  to  have 
the  purchaser  pay  the  freight  and  deduct  the  amount  from  his  invoice. 

When  one  railroad  company  turns  a  shipment  over  to  another  company  after  having  carried  the  goods 
a  part  of  the  way,  the  first  company  has  a  claim  for  freight  charges  for  the  work  it  has  done.  These  charges 
are  ' '  advanced  "  by  the  railroad  receiving  the  goods  and  the  consignee  must  pay  them.  ' '  Freight  and  advanced 
charges  collect"  is  an  instruction  to  the  agent  at  destination  to  collect  from  the  consignee  the  freight  charges 
on  his  road  plus  any  "advanced  charges." 

Bill  of  Lading. 

A  bill  of  lading  (abbreviated  B/L)  is  a  contract  between  the  transportation  company  and  the  shipper 
regarding  the  transportation  of  a  certain  shipment  of  goods.      It  is  in  effect  a  receipt  given  by  the  railroad 


form  of  original  straight  bill  of  lading 


(^/f^^y^  Raaroad  Company 


STRAIGHT  Bill  OF  LADING-ORIGINAL-NOT  NEGOTIABLE. 


Skipper'*  Nov.. /..... 
Agent's  No. 


a-winoations  and  tariffs  in  effect  on  the  date  of  issue  of^lh 

19— ....      FROM 


1» 

IS 


o  o 


it 

«/>o 

si 

i! 


the  property  described  below,  in  apparent  food  order,  except  as  noted  (contents  and  condition  of  contents  of  packages  unknown),  marked,  consigned  and  destined  as  in- 
dicated below  fwhieh  said  company  aerees  to  carry  toils  usual  place  of  delivery  at  said  destination,  if  on  itsroadS-otherwise  to  deliver  to  another  carrier  on  the  route  to 
said  destination.  It  is  mutually  agreed,  as  to  each  carrier  of  all  or  any  of  said  property,  overall  or  any  portion  of  said  route  to  destination,  and  as  to  each  party  at  any 
time  Interested  in  all  or  any  of  said  property,  that  every  service  to  be  performed  hereunder,  shall  be  subject  to  all  the  conditions,  whether  printed  or  written,  herein 
contained  (INCLUDING  CONDITIONS  ON  BACK  HEREOF)  and  which  are  agreed  to  by  the  shipper  and  accepted  for  himself  and  his  assigns. 


The  rate  of  freight  fr 

to 

ts  per  100  lbs. 

IF     Time.  Ut 

IFl.tCllil 

IF  2d  Clan 

IF  Ru  1.26 

IF  3d  CI  to 

IF  Rule  26 

IF  Rule 28 

IFethCla.. 

IF  5th  C1.M 

IF6thCla»s 

1      IF  Special 

IF  Special 

Der 

••> 

ZZZS^^Z 


(Mail  Address— Not  tor  purposes  of  Delivery.) 

Consigned  to.. 

Destination. (jt&ftJJJZst.. „ State  of  iJfdX/- County  of. 

Route, „ Car  Initial ... Car  No. 


/ 

L 

I 


DESCRIPTION  OF  ARTICLES  AND  SPECIAL  MARKS 


WEIGHT 

(Subject  to  Correction) 


CLASS  OR 
RATE 


CHECK 
COLUMN 


Received  $ _ 

to  apply  In  prepayment  of  the  char- 
ges on  the  property  described  hereon. 


Agent  or  Cashier. 


Charges  Advanced: 


Shipper. 

c  StuJnrt  si  pi  ktr* .  J 

tign 


Agent 


(This  Bill  of  Lading  Is  to  be  signed  by  the  shipper  and  agent  of  the  carrier  issuing  same.) 


company  and  a  contract  making  stipulation  as  to  the  freight  charrea  and  defining  and  limiting  the  carrier's 
liability.     Bills  of  lading  are  made  out  in  triplicate  and  signed  by  both  shipper  and  railroad  company. 

Large  shippers  usually  have  on  hand  their  own  supply  <>f  bills  of  lading,  and  for  their  own  convenience 
fill  them  out  in  advance,  all  but  weights,  rates,  and  the  railroad  company's  signature;  this  avoids  delay  at 
the  freight  depot,  as  all  the  receiving  clerk  has  to  do  is  to  sign  and  number  the  three  forms,  hand  back  two 
copies,  and  retain  one.  Smaller  shippers,  however,  use  bills  of  lading  supplied  by  the  railroad  company. 
Shippers  need  not  fill  out  the  bills  of  lading  themselves,  unless  they  so  desire. 

As  a  matter  of  actual  practice,  weights  and  rates  are  usually  not  filled  in  by  the  freight  clerk  at  the 
time  the  freight  is  delivered  to  the  depot  by  the  shipper,  but  are  ascertained  later.  Consequently  the  two 
-?:;nies  which  the  shipper  receives  do  not  show  weights  and  rates.     What  a  thing  weighs  is  a  matter  of  fact, 


40 


HOW    BUSINESS    IS    DONE 


and  the  rate  is  a  matter  of  law,  so  the  omission  of  these  two  items  from  the  forms  returned  to  the  shipper 
is  not  material.  Weight  is  subject  to  correction  and  the  consignee  may  refuse  to  accept  a  shipment  until 
incorrect  weights  have  been  corrected  or  allowed  for.  Rates  are  prescribed  by  the  Interstate  Commerce 
Commission  and  are  published  by  the  railroads  in  formal  tariff  schedules,  called  Freight  Classifications;  so 
that  if  a  rate  has  been  incorrectly  entered  on  a  bill  of  lading  this  is  also  subject  to  correction  by  either  the 
railroad  company  or  the  consignee. 

If  the  consignor  wishes  to  prepay  the  freight,  however,  or  if  for  any  other  reason  it  is  necessary  or 
desirable  that  he  know  the  weight  and  rate  in  advance,  the  receiving  freight  clerk  will  fill  in  the  weight  and 
have  the  rate  filled  in  by  the  proper  official  at  the  time  of  signing  the  bill  of  lading  for  the  company. 

A  "Straight"  bill  of  lading,  a  form  of  which  is  shown  herewith,  is  always  used  when  the  goods  shipped 
are  to  go  straight  to  the  consignee.  "Straight"  bills  of  lading  are  made  out  for  delivery  to  the  consignee 
and  are  non-negotiable. 

The  three  bills  which  constitute  the  set  are  headed  respectively  "Original,"  "Shipping  Order,"  and 
"Memorandum."  The  "Original"  and  "Memorandum"  go  to  the  consignor.  The  "Shipping  Order"  is 
retained  by  the  railroad  company.  It  is  required  by  law  that  they  be  printed  upon  white  paper,  8$  inches 
wide.      Reproductions  of  the  three  headings  are  shown  below. 

HEADINGS    FOR    THE    THREE    FORMS    (STRAIGHT    B-L) 

A 


Uniform  BUI  ol  Lading— Standard  lorm  ol  Straight  Bill  ol  Lading  approved  by  the  Interstate  Commerce  Commission  by  Order  No.  787  ol  June  27, 1908. 

Railroad   Company. 

Shippers  No. _.. 


STRAIGHT   BILL   OF  LADING— ORIGINAL— NOT  NEGOTIABLE. 


Agents  No.. 


RECEIVED,  subject  to  the  classifications  and  tariffs  in   effect  on  the  date  of  issue  of  this  Original  Bill  of  Lading,    c 

B 


For  use  in  connection  with  the  Standard  form  ol  Straight  Bill  ol  Lading  approved  by  the  Interstate  Commerce  Commission  by  Order  No  787  ct  June  27, 1908. 

Railroad   Company. 

Shippers  No _ 

THIS    SHIPPING    ORDER    must  be  legibly  filled  in,  In  Ink.  in  Indelible   Pencil,  or  in   Carbon,  and  . 

retamed  by  the  Agent . Agents    No. _ 

RECEIVE,   subject   to  t">e  classifications   and    tariffs   in   effect  on  the  date  of  Issue  of  this  Shipping  OMer,       E.TC 


For  use  in  connection  with  the  Standard  form  ol  Straight  Bill  ol  Lading  approved  by  the  Interstate  Commerce  Commission  by  Order  No.  787  ol  June  27, 1908. 


Railroad   Company. 


THIS    MEMORANDUM    '«  an  acknowledgment  that  a  bill  ol  lading  has  been  issued  and  is  not  the  Shippers  No,. 

Original  Bill  of  Lading,  nor  a  copy  or  duplicate,  covering  the  property 
named  herein,  and  is  intended  solely  for  filing  or  record.  Agents    No. 


RECEIVED,  subject  to  the  classifications  and  tariffs  in  effect  on  the  date  of  the  receipt  by  the  carrier  of  the  property  described 


In  the  Original  Bill  of  Lading 


Ere. 


When  the  shipper  receives  the  "Original"  and  "Memorandum"  bills  of  lading  signed  by  the  railroad 
company,  he  usually  retains  the  "Original,"  and  mails  the  "Memorandum"  to  the  consignee  as  evidence 
that  the  goods  have  been  shipped.  Should  the  consignee  be  unknown  to  the  freight  agent  at  the  receiving 
point,  the  agent  would  refuse  to  deliver  the  property  except  upon  presentation  of  the  "Original"  bill  of  lading. 
If  for  this  reason  or  some  other,  the  consignee  should  ask  the  consignor  to  send  him  a  bill  of  lading,  the  con- 
signor would  have  to  mail  him  the  "Original,"  retaining  the  "Memorandum." 

Order  Bill  of  Lading 

An  "Order"  bill  of  lading  is  used  when  the  shipment  is  consigned  to  the  order  of  some  party  who  is  to 
transfer  it  by  endorsement  to  the  party  for  whom  the  goods  are  intended.  It  is  usually  made  out  to  the 
order  of  the  shipper  himself,  who  wishes  to  make  collection  from  the  consignee  before  he  will  endorse  the  bill 
of  lading  ("Original")  over  to  him.  This  collection  is  usually  made  through  a  bank,  by  means  of  a  draft 
against  the  consignee.  An  "Order"  bill  of  lading  may,  however,  be  made  out  to  the  order  of  some' one  acting 
as  an  agent  for  the  shipper,  or  to  some  one  who  wishes  to  sell  to  a  third  party  without  unloading  the  freight 
from  the  cars.      Sometimes  a  jobber  sends  to  a  wholesale  house  an  order  which  is  to  be  shipped  direct  to  a 


HOW    BUSINESS    IS    DONE 


41 


customer  from  whom  the  jobber  wishes  to  collect  before  delivery.  In  this  case  the  wholesale  house  would 
ship  direct  to  the  town  of  the  jobber's  customer,  but  would  consign  the  goods  to  the  order  of  the  jobber,  who 
would  then  draw  upon  his  customer,  and  when  the  money  was  forthcoming  would  endorse  the  bill  of  lading 
over  to  him. 

The  three  bills  which  constitute  a  set  of  "Order"  bills  of  lading  are  headed  respectively  "Original," 
"Shipping  Order,"  and  "Memorandum,"  the  same  as  the  "Straight"  bills  of  lading.  They  differ  from  the 
"Straight"   bills  of  lading  in   the  following  particulars: 

Color. — The  "Original"  must  be  yellow.     The  other  two  must  be  blue. 

" Consigned  to  Order  of"  must  appear  in  place  of  the  words  "consigned  to." 

Extra  Spaces  must  be  allowed  for  the  name  and  address  of  the  person  for  whom  the  goods  are  intended, 
the  space  for  the  name  being  preceded  by  the  word  "Notify."  It  becomes  the  railroad's  business  to  notify 
this  person  of  the  arrival  of  the  goods,  so  that  he  may  take  steps  to  pay  the  shipper  for  them  (usually  through 
the  bank,  as  previously  stated)  and  get  the  bill  of  lading. 

An  Extra  Paragraph  must  be  inserted  in  addition  to  all  that  appears  cm  the  "Straight"  form,  which 
reads:  "The  surrender  of  the  original  ORDER  bill  of  lading  properly  endorsed  shall  be  required  before 
the  delivery  of  the  property.  Inspection  of  property  covered  by  the  bill  of  lading  will  not  be  permitted  unless 
provided  by  law  or  unless  permission  is  endorsed  on  the  original  bill  of  lading  or  given  in  writing  by  the  shipper." 

Notice  of  Freight  Received. 

When  the  shipment  arrives  at  its  destination  the  agent  at  destination  either  mails  to  the  consignee 
a  "notice  of  freight  received"  printed  on  the  back  of  a  postal  card,  as  shown,  or  delivers  at  his  office  a  printed 


Great  Western  Transportation  Co. 

Station      <&&£& '... 


isfrtUA^ 

nThe   following  property  consigned   to  you   from 
has  arriye'd/at  this  depot  and  is  now  ready  lor  delivery. 


ARTICLES 


-^d^ceAyteJ 


Which  is  now  at  your  risk.     Please  call,  pay  charges  and  ren>e*£  property  within  24,/iours or  same  will  bv 
subject  to  storage  or  delivery  to  warehouseman. 

.Agent. 


TO  AGENT  G.  W.  T.  CO. 

Deliver  the  above  freight  to. 


.who  is  hereby  authorized  to  receipt  for  same. 


Consignee. 


N.  B;— Unless  you  call  for  the  freight  yourself,  please  fill  out  and  sign  the  foregoing  order. 


form  similar  in  content.     The  consignee,  immediately  upon  receipt  of  a  notice  of  freight  received,  will  give 
the  notice  to  his  drayman  with  instructions  to  call  for  the  package. 

FAST  FREIGHT  LINES. 

Under  the  old  plan  of  shipping  if  the  route  lay  over  several  lines  of  road  when  the  freight  came  to  the  end 
of  one  line  it  was  transferred  to  another  car  on  the  next  line.  To  expedite  shipments  separate  corporations  were 
organized  for  the  purpose  of  furnishing  cars  and  doing  business  on  several  lines  of  road.  By  this  means  quicker 
time  could  be  made  than  by  the  railroads  direct.  Desiring  to  ship  by  fast  freight,  ascertain  the  line  doing  business 
over  the  route  in  contemplation  and  mark  the  package  via  that  line.  These  fast  freight  lines  operate  their  own 
cars,  and  make  favorable  arrangements  with  the  railroads  over  which  they  run  for  hauling  them.  They  are 
understood  to  be  prosperous  institutions.  It  is  said  that  many  of  the  railroads  are  interested  in  them,  and  for  this 
reason  they  secure  favorable  terms.  Nothing  is  saved  in  the  cost  of  shipping  this  way,  but  it  is  usually  more 
expeditious.  Orders  received  to  be  sent  by  "fast  freight"  are  understood  to  be  by  one  of  these  lines.  They  load 
cars  for  large  towns  which  go  through  unbroken  on  fast  trains. 


42 


HOW   BUSINESS   IS   DONE. 


CORRESPONDENCE. 

Nothing  is  of  more  importance  to  the  average  business  house  than  the  manner  in  which  its  correspondence 
is  carried  on.     Especially  is  this  true  of  the  wholesale  house  where  a  large  amount  of  its  business  must  be  done  in 

this  manner. 


Cabinet  Letter  File. 


Business  men  have  found  that  it  is  necessary 
to  preserve  and  file  for  future  reference  not  only  every 
letter  received  but  a  copy  of  every  letter  sent.  In  this 
way  they  have  a  complete  duplicate  of  both  sides  to  a 
correspondence.  In  case  any  dispute  should  after- 
wards arise  as  to  what  was  written  in  this  connection, 
they  are  not  in  doubt  for  a  moment.  We  will  first 
consider  the  letters  and  orders  written  by  us  :  In 
case  a  typewriter  is  in  use  it  should  contain  a  "  copy- 
ing ribbon."  If  the  letter  be  written  with  a  pen  then 
it  should  be  done  with  copying  ink.  When  written 
it  is  then  ready  for  copying  in  the  "letter  book." 
This  is  usually  a  book  of  blank  tissue  paper  leaves. 

Drawer. 


Its  leaves  should   be   paged   and    it  should   contain 

either  in  the  front  or  back  a  good  vowel  index.     To 

copy  a  letter  moisten  the  first  vacant  leaf  in  the  letter 

book,  first  placing  an  oiled  sheet  under  it  to  prevent 

the  moisture  from  going  through  to  the  leaf  below, 

and  on  this  moistened  leaf  lay  the  letter  face  down. 

It  is  well  to  lay  an  oiled  sheet  or  common  blotter  on 

top  of  this.     Close  the  book  and  put  it  in  the  press, 

leaving  it  there  but  a  few  moments  will  be  sufficient 

if  it  be  screwed  down  tight.     To  moisten  the  leaves  as 

described  above  there  are  many  devices,  among  them 

a  camels-hair  brush  and  moistened  cloths.     Care  must  be  taken  to  get  the  proper  amount  of  water  on  the  leaves. 

If  too  much  water  be  used  the  ink  will  run  and  the  letters  will  be  blurred  and  indistinct.     If  an  insufficient 

amount  be  used  the  copy  will  be  dim  and  in  some  places  wanting.     A  little  care  will  soon  determine  the  moisture 

proper  fcr  the  ink  and  paper  you  use.      Several 
A  Filer.  letters  may  be  copied  at  the  same  time  and  in 

the  same  manner.  When  a  letter  is  copied,  or 
at  the  earliest  convenient  time,  it  should  be 
indexed. 

In  many  houses  the  invoices  are  written 
in  copying  ink  and  copied  in  this  manner,  in  a 
large  book  with  ruled  columns.  This  serves  as 
a  sales  book  and  has  the  advantage  of  being  an 
exact  reproduction  of  the  invoices.  Footings 
are  carried  along  and  postings  made  from  this 
the  same  as  from  au  ordinary  sales  book. 

Sometimes  it  is  desirable  to  make  a 
number  of  duplicate  copies  of  the  same  letter  or 
document.  If  the  ink  used  be  good  it  can  be 
done  in  the  manner  just  described  or  it  may  be 
done  by  the  carbon  process. 

FILING    CORRESPONDENCE. 

The  correspondence  received  by  a  house 
after  being  answered  is  filed  according  to  some  system  by  which  it  may  be  easily  located  in  case  it  is  needed  for 
reference.     There  are  many  systems  in  vogue  but  undoubtedly  the  cabinet  system  is  the  most  convenient  and 


HOW   BUSINESS   IS    DONE. 


4S 


satisfactory.     It  consists  of  a  cabinet  of  as  many  drawers  as  the  size  of  the  correspondence  demands.     In  each 

drawer  is  a  "filer"  with  leaves  indexed  by  letters  on  the  front  edge.     A  letter  is  filed  by  placing  it  unfolded 

between  the  proper  leaves.     This  is  usually  determined  by  the  initial  letter  of  the  writer's  name.    Thus  a  letter 

written  by   Thomas  Arnold 
f  ransfer  Case.  would  be  filed  uuder  the  A 

leaf  and  so  on  :  but  if  the 
cabinet  be  a  large  one  it  will 
be  still  further  subdivided, 
and  a  glance  at  the  index 
may  show  that  it  should  be' 


filed  under  the  Arn  leaf. 
When  the  filer  completely 
fills  the  drawer  of  the  cabi- 
net it  is  detached  therefrom 
by  means  of  a  simple  device 
at  the  back,  and  it  is  then 
lifted  out  and  into  a  trans- 
ferred volume  and  a  new 
filer  is  put  into  its  place  in  the  cabinet.  These  transfer  cases  are  numbered  consecutively.  On  the  bottom  of  the 
drawer  of  the  cabinet  is  pasted  a  blank  record  to  be  filled  out  showing  to  what  numbered  "transfer  cases"  each  of 
its  filers  has  been  transferred.  This  is  to  assist  in  finding  a  letter  received  a  considerable  time  since.  This 
record  also  shows  the  day  when  the  first  letters  were  placed  in  each  filer  and  the  date  of  its  transfer.  By  this 
means  one  can  lay  his  hands  in  an  instant  upon  letters  received  years  before. 

Not  only  are  letters  filed  in  this  manner  but  frequently  a  drawer  is  set  aside  and  labeled  for  •*  Paid  Bills," 
"  Receipts,"  etc. 


FILING   ORDERS. 

Nothing  is  more  important  in  the  matter  of  records  than  that  every  order  received  should  be  filed  for  future 
reference.  An  order  is  the  customer's  proposition  ;  the  filling  of  it,  your  acceptance  of  that  proposition.  There 
are  many  plans  and  devices  in  use  for  this  purpose.  Many  use  the  ordinary  cabinet  letter  file  system,  one  or  more 
drawers  being  set  aside  for  this  purpose. 

When  the  orders  are  taken  verbally  by  salesmen,  either  in  the  store  or  at  the  customer's  place  of  business, 
they  can  be  taken  on  uniform  blanks  prepared  for  that  purpose.  One  of  the  most  satisfactory  systems  of  this  kind 
is  the  Page-McCleary  system.  It  is  generally  used  in  the  wholesale  grocerj',  hardware  and  drug  businesses,  and 
also  in  the  printing  and  bookbinding  trades.  The  order  is  copied  on  to  a  blank  form  as  shown  in  the  illustration. 
After  being  Ok'd  by  the  credit  man  it  is  put  with  others  in  a  patent  holder,  and  in  this  shape  goes  through  all 
necessary  hands  until  it  is  returned  to  the  office  from  the  shipping  department.  From  it  the  bill  clerk  makes  his 
bill  and  extends  the  amounts  in  the  blank.  The  blank  with  all  information  it  furnishes  is  taken  from  the  holder 
and  placed  in  its  proper  position  in  a  patent  binder,  which  serves  as  a  salesbook,  and  from  it  the  item  is  posted 
direct  to  the  customer's  account  in  the  ledger.     But  one  order  is  entered  on  a  sheet. 


Order  Holder. 


The  order,  as  received  from  the  salesman  on  the  sheet  (which  he  carries  with  him),  is  registered  by  name 
and  number  only  in  a  register.  The  purpose  of  the  register  is  to  keep  track,  where  necessary,  of  the  time  taken 
to  ship  goods  and  to  guard  against  loss  of  order  or  neglect  to  bill  same. 

The  order  sheet  is  then  placed  in  the  holder  which  makes  a  temporary  book  to  be  used  while  the  order  is 
being  selected,  shipped  and  billed.  The  holder  protects  the  sheet  from  being  torn,  soiled  or  lost.  After  the 
goods  are  selected  by  the  stock  clerk  and  checked  in  the  column  provided  on  the  order  sheet,  weights  entered 
and  necessary  notations  made  by  selector  and  shipping  clerk,  the  holder  and  order  sheet  are  returned  to  the  office, 
and  the  bill  is  made  ;  the  extensions  are  also  made  on  the  order  sheet  and  footed,  and  the  bill  verified.  The  bill 
clerk  then  marks  the  date  billed  in  proper  space  on  sheet.  The  order  sheet  is  now  taken  from  the  temporary 
holder  and  put  in  the  permanent  binder.  In  this  permanent  binder,  (which  is  equivalent  to  a  day  book )  the 
finished  business  of  each  day  follows  in  consecutive  order.  The  binder  is  paged,  and  the  charges  are  made  directly 
from  this  binder  into  the  ledger,  or  in  exceptional  cases  are  journalized  and  then  posted. 


44 


HOW   BUSINESS  IS  DONE. 


1&3_ 


&L 


Shipping  Blank, 
country  department. 


Date  Sold 


7yf — ~       ^s^/>  WHOLESALE  GROC 


WM.   D.   BROWN    8c    CO.  ,A v"~ 

WHOLESALE  GROCERS.  ~<^rZ^Pc/^j^ 


TOWN  «no  STATE 
SHIP   BY_ 


<%7*,»An^  v  ^ 


j^-z^^c^ 


lX 


QUANTITY 


f^ff    VSJ^p^ 


REGISTER    NO. 


^"     X^  -r^ 


7<faw/- 


3/*- 


/^ 


^ 


^kz_ 


DATE  BILLED 


$L 


LFDOER  FOLIO 


/>*££/. 


#^;: 


M" 


_t£ 


3>f 


4M 


Ml. 


40 


dZf 


iX 


%2 


<*M,j  /&rm^ 


.stf^ny 


/0 


_^£ 


4- 


\X 


/& 


(/f/y.  dfc,  (j/Jkz/nJ/ 


^£ 


M 


^ 


*/-  tf.y 


4a> 


'+ 


M 


r,f;?J//( SmJt  (  J( /0Us7/ms#/ 


**,  fimuJ>, 


yfa*J%>  yffaj  K  A^ra /T, 


7Z/t,/:jk 


jj^_ 


Amount  Forward 


2,3 1  <?. 


Thus  we  hare  taken  the  original  entry  of  the  salesman,  added  to  it  the  necessary  credit  notations,  the  check 
marks  of  the  selector  and  shipper,  the  extensions  of  the  bill  clerk  and  marked  the  date  of  bill.     We  have  then 

entered  it  in  a  day  book  mechanically 
Permanent  Binder.  by  making  it  a  leaf  of  the  binder. 

This  describes  the  course  of  hand- 
ling an  ordinary  order.  Where  orders 
are  shipped  incomplete,  or  where  there 
are  alterations  or  substitutions,  or 
where  the  order  is  taken  for  future 
shipment,  or  to  be  manufactured,  there 
are  various  modifications  of  this  sys- 
tem ;  also  in  very  large  houses  where 
the  business  is  separated  into  depart- 
ments, where  each  salesman's  business 
is  kept  separate,  where  profits  are  fig- 
ured from  day  to  day,  where  the  bus- 
iness is  divided  alphabetically,  or  into 
territories,  there  are  still  other  modi- 
fications and  changes  necessary  ;  and 
also  in  houses  of  the  largest  calibre 
there  are  certain  conditions  and  mod- 
ifications to  the  system  to  enable  all  work  to  be  completed,  posted,  profits  figured,  etc.,  before  the  order  is  placed 
in  the  binder. 


HOW    BUSINESS   IS   DONK. 


45 


COMMERCIAL   AGENCIES. 

Manufacturers,  wholesalers  and  jobbers  have  frequent  occasion  to  know  the  worth  and  credit  standing  of 
their  customers,  for  much  of  the  business  in  these  lines  is  done  on  credit.  Other  things  being  equal  the  house 
that  makes  no  bad  debts  is  the  more  successful.  To  place  in  their  hands  as  full  and  complete  information  as 
possible  touching  the  responsibility,  credit  and  prospects  of  success  of  their  customers  is  the  business  of  Commer- 
cial Agencies.  These  agencies  are  vast  concerns  extending  over  the  entire  couutry  and  having  agents  or  reporters 
in  every  city  and  in  almost  every  village.  Traveling  reporters  are  also  employed  who  are  constantly  collecting 
information  in  reference  to  the  standing  of  persons  asking  for  credit  for  merchandise.  This  information  is  arranged 
and  classified  by  states  and  districts  and  published  in  large  quarto  volumes.  A  person  desiring  such  information 
may  become  a  subscriber  to  the  agency  upon  the  payment  of  a  certain  fee.  He  can  subscribe  for  a  certain 
district  or  districts  or  for  the  United  States,  in  which  case  the  charge  is  greater.  When  he  becomes  a  subscriber 
the  Agency  loans  him  a  volume  of  its  reports  covering  the  territory  for  which  he  has  subscribed.  This  report  does 
not  give  opposite  a  firm's  name  its  reported  standing,  but  instead  there  will  be  found  one  or  two  letters  or  figures. 
The  meaning  of  these  letters  and  figures  is  determined  by  reference  to  a  key.  There  is  not  only  economy  in  the 
plan  but  it  serves  to  keep  the  information  for  the  exclusive  benefit  of  the  subscriber.  In  addition  to  a  volume 
of  reports  a  subscriber  is  entitled  to  a  certain  number  of  special  reports  on  firms  about  whose  standing  he  wishes  to 
know  more  that  given  in  the  reports.  Applications  for  special  reports  are  made  on  blanks  furnished  for  that  pur- 
pose and  are  signed  by  the  number  of  the  subscriber  instead  of  by  his  name.  The  object  of  this  is,  if  the  request 
should  be  lost  or  mislaid  and  fall  into  the  hands  of  others,  not  even  the  one  inquired  about  could  tell  who  had 
asked  for  the  report. 

The  reports  of  the  Commercial  Agencies  are  in  general  so  reliable  and  fair  that  a  subscription  to  one  is 
considered  by  wholesalers  and  manufacturers  as  a  necessary  item  of  expense  for  the  year.  The  reliable  debtor  is 
anxious  to  secure  a  "good  rating"  with  the  agency,  and  in  most  cases  does  not  consider  it  impertinent  when 
asked  by  an  agency  reporter  to  make  a  detailed  statement  of  his  business  affairs.  Some  agencies  also  do  a  genera  \ 
collecting  business.  This  they  can  do  economically  through  their  vast  army  of  agents  that  are  to  be  fmn  i 
everywhere. 

BILLING. 

When  a  bill  of  goods  is  sold  or  when  services,  especially  professional  services,  have  been  rendered,  it  ih 
customary  for  the  creditor  to  render  the  debtor  an  itemized  statement  or  bill  of  his  charges.  This  is  called  a  bill 
or  invoice.     When  it  is  for  goods  sold  either  term  applies,  but  if  it  be  for  services  rendered  it  is  called  a  bill. 


Bill. 


"^Ai^^/y^^Ay -..zo7?'  /^9^) 


&4vca^U^.   -^^U^^c^/  J%^LA^UA/  V>.1&\ 


TERMS 


(&>      A*- 


nn//r  tn/X'lst  /P,/,i i,u 


sQJ/aA'^ 


f'/'oy,  *7/ort  '/'op,  '/'* '<£,  '//e/,  ■ /&oy 


aJ  (o< 


/Z*/tf    ?U/\ 


2,0/ 


\  /. 


Z^i  ^o 


46 


HOW   BUSINESS   IS   DONE. 


BlI,!,. 


*&M&, 


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Houses  usually  have  bills  with  printed  heads.  If  the  bill  has  many  items  a  longer  bill  will  be  used.  Bills  are 
cut  from  foolscap  paper,  size  14x17  inches,  their  width  being  §%  inches.  When  they  are  cut  two  from  a  sheet  they 
are  called  halves,  when  four  from  a  sheet  they  are  called  fourths,  and  when  six  from  a  sheet,  sixths.  The  printed 
heading  will  contain  the  name,  address,  and  usually  the  business  of  the  creditor,  and  a  blank  space  for  the  date, 
name  and  address  of  the  debtor,  also  the  terms  on  which  the  goods  are  sold.  If  the  bill  be  for  services  rendered  at 
different  times  the  columns  at  the  left  of  the  bill  should  be  used  for  the  dates  on  which  the  services  mentioned  on 
the  same  line  were  rendered.  If  the  bill  be  for  goods  sold  the  small  column  at  the  left  should  be  used  for  the 
number  of  articles.  The  first  column  to  the  right  is  for  the  amount  of  each  item,  and  the  second  column  for  the 
total.  The  bill  should  state  in  the  body  the  price  of  each  item  per  pound,  barrel  or  otherwise.  If  goods  are  billed 
by  the  pound  and  there  are  several  packages  of  various  weights,  the  weight  of  each  package  should  be  shown  in 

MEMORANDUM  OF  CREDIT. 


CHICAGO,     tf9<y£  #/£     189/ 


J.  W.  Butler  Paper  Co. 

WHOLESALERS  AND  JOBBERS. 


218  MONROE  STREET 


To  Mr.  g*(^faZ4^Dr. 


1  &'&&6C'rfL€Z'ia&  &-?a- 


VSs 


HOW   BUSINESS    IS   RONE. 


47 


detail  and  also  the  total.  In  general  the  bill  should  be  so  clear  that  even  a  stranger  to  the  transaction  could  inter- 
pret it.  It  should  also  be  in  such  form  that  the  debtor  could  easily  verify  it.  When  the  bill  is  paid  it  should  be 
receipted  by  the  creditor  on  the  bottom.  1  bus  the  bill  and  its  receipt  go  together  and  should  be  carefully  filed  for 
future  reference.    Bills  from  importing  houses  are  usually  more  or  less  complicated  and  we  have  shown  two  of  them. 

CREDIT  MEMORANDA. 

It  sometimes  happens  that  a  seller  may  have  billed  goods  to.a  buyer  at  a  higher  rate  than  he  should  have 
done ;  or  it  may  be  the  goods  are  damaged  or  not  up  to  the  grade  expected ;  or  some  of  them  may  have  been 
returned.  In  such  cases  the  seller  will  send  the  buyer  a  credit  memorandum  of  the  amount  he  acknowledges  as 
due  the  buyer  as  an  offset  or  credit.  The  object  is  to  keep  the  buyer's  account  exactly  the  reverse  of  the  sellers. 
When  the  goods  were  sold  the  seller  charged  the  buyer  the  full  amount  of  the  bill,  to  save  changing  this  charge 
on  the  ledger,  he  gives  the  buyer  a  credit  for  the  correction.  The  buyer  should  therefore  credit  the  seller  with  the 
full  amount  of  the  bill  and  debit  him  for  the  amount  of  the  correction.  Houses  doing  much  billing  usually  have 
credit  memoranda  with  printed  headings,  and  these  are  usually  printed  on  paper  of  a  color  other  than  that  of 
their  bills. 


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MONTHLY  STATEMENTS. 

Promptly  on  the  first  of  each  month  the  merchant  sends  to  each  of  his  debtors  a  statement  of  his  account, 
showing  the  date  and  amount  of  each  purchase  during  the  past  month.  It  is  a  summary  of  the  bills  sold  and  the 
payments  made  thereon  during  the  month.     Retailers  do  not  always  render  an  itemized  bill  at  time  of  each  pur- 


48. 


HOW   BUSINESS   IS   DONE. 


chase  ;  in  that  case  the  statement  should  contain  a  detailed  list  of  the  articles  purchased  together  with  date  of 
purchase  of  each  article  and  its  price.  This  is  called  an  itemized  statement.  When  a  check  is  sent  in  settlement 
of  the  balance  of  the  statement,  the  statement  should  be  sent  -along  with  it  to  be  receipted  and  returned. 
Statements  usually  start  with  the  balance,  if  any,  due  from  last  month's  account.  Some  firms  print  on  the  bottom 
of  their  statements  a  notice  that  the  statement  is  sent  whether  the  balance  is  due  or  not,  that  the  debtor  may  make 
comparison  with  his  account  and  that  for  so  much  of  the  account  as  may  be  due  they  will  be  pleased  to  receive 
remittance.  Sometimes  also  the  statement  is  made  that  unless  a  remittance  be  received  for  the  balance  by  a 
certain  date  they  will  draw  upon  him  for  the  balance.  Promptness  and  regularity  in  issuing  monthly  statements 
assists  materially  in  the  prompt  collection  of  accounts.  It  is  therefore  promptly  attended  to  by  the  systematic 
business  man. 

CORPORATIONS. 

Many  business  enterprises  which  cannot  be  successfully  conducted  by  the  individual  or  a  partnership,  can 
be  by  a  corporation.  A  partnership  is  dissolved  by  the  death  of  a  partner,  but  a  corporation  is  not  dissolved  by 
the  death  or  transfer  of  the  stock  of  a  shareholder.  Business  enterprises  requiring  a  large  amount  of  capital,  and 
consequently  the  co-operation  of  a  large  number  of  investors  cannot  be  conducted  as  a  partnership.  A  partner  is 
personally  liable  for  the  debts  of  a  partnership,  hence  there  would  be  a  timidity  on  the  part  of  capitalists  to  invest 
in  a  large  undertaking  organized  as  a  partnership.  On  the  other  hand  a  stockholder  is  not  usually  liable  for  the 
debts  of  the  corporation  if  his  stock  be  fully  paid.  In  some  States  he  is  liable  to  be  assessed  an  amount  equal  to 
the  amount  of  his  stock.     This  is  called  ''double  liability." 

Certificate  of  Stock  and  Stub. 


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ORGANIZATION. 

Corporations  are  organized  for  almost  all  purposes  for  which  men  engage  in  business.  They  may  be  organ- 
ized by  special  act  of  the  legislature,  or  in  the  manner  described  in  a  general  law  for  that  purpose.'  Many  State 
constitutions  prohibit  their  legislatures  from  granting  charters  by  special  act.  While  the  laws  of  various  states 
differ,  yet  the  usual  method  of  organizing  a  corporation  is  for  three  or  five  persons  to  agree  on  the  organization 
they  wish,  its  name,  amount  of  capital  required,  place  of  business,  nature  of  business,  etc.  This  they  set  forth  in 
an  application  to  the  Secretary  of  State  on  a  blank  furnished  by  that  officer.  He  then  issues  to  the  organizers  a 
commission  entitling  them  to  solicit  subscriptions  for  the  stock  of  the  proposed  corporation.  When  the  stock  is 
fully  subscribed  for  they  call  a  meeting  of  the  stockholders  to  elect  a  board  of  directors,  etc. 

The  organization  being  completed,  the  commissioners  make  report  of  their  doings  in  a  written  report  duly 
acknowledged,  to  the  Secretary  of  State,  who  then  issues  a  charter  which  is  recorded  in  the  office  of  the  recorder 
of  deeds.     The  corporation  is  then  authorized  to  do  business. 

VOTING. 
In  voting  each  stockholder  has  as  many  votes  as  he  holds  shares  of  stock.  Consequently  if  one  holds  a 
majority  of  stock  he  can  control  an  election  and  he  is  said  to  hold  a  controlling  interest.  In  some  states  in  voting 
for  directors,  if  there  are  three  directors  to  be  elected,  and  a  stockholder  has  'ten  shares,  he  has  thirty  votes,  and 
these  he  can  vote  for  one  candidate,  or  distribute  them  as  he  likes.  This  is  called  the  cumulative  system,  and  is 
to  give  the  minority  a  representation. 


HOW   BUSINESS   IS   DONE.  49 

OFFICERS. 

The  board  of  directors  are  elected  by  the  stockholders,  but  the  directors  elect  their  owu  officers.  The  cor- 
poration is  managed  by  the  board  of  directors.     The  by-laws  usually  describe  the  duties  of  each  officer. 

STOCK. 

When  a  subscriber  for  stock  pays  for  the  same  according  to  agreement,  there  is  issued  to  him  one  or  more 
certificates  of  stock.  These  certificater.  are  the  only  evidence  the  holder  has  of  his  interest  in  the  corporation. 
They  may  be  sold  and  transferred  as  personal  property.  When  sold  they  are  endorsed,  giving  the  secretary  the 
power  to  make  a  record  of  the  transfer  on  the  books  of  the  company.  The  old  certificate  is  taken  up  by  the  sec- 
retary, and  pasted  on  the  stub  of  the  stock  book  from  which  it  was  originally  torn.  A  new  certificate  is  then 
issued  to  the  purchaser  of  it. 

When  stock  in  a  company  is  subscribed  for,  it  may  be  agreed  that  the  shareholder  is  not  to  pay  the  full 
value  of  the  stock.  Thenar  value  of  stock  is  the  face  value  of  it.  The  market  value  is  the  price  at  which  it  will 
sell  on  the  market  usually  quoted  at  a  certain  per  cent,  of  the  par  value. 

Preferred  stock  is  stock  that  has  a  preference  over  other  stock  in  the  matter  of  dividends.  That  is,  dividends 
are  paid  on  it  up  to  a  certain  per  cent,  whether  the  ordinary  stock  is  entitled  to  any  or  not. 

Common  stock  is  stock  that  is  not  preferred. 

There  are  many  reasons  for  issuing  preferred  stock  :  a  company  may  be  on  the  eve  of  bankruptcy,  and  in 
order  to  induce  outside  capital  to  come  to  their  assistance  they  increase  the  capital  stock,  making  the  new  stock 
preferred. 

Transfer. 


^5^^^ ^k^^i^l^S^^^ 


^Mdnt&d&Mw 


Watered  stock  is  that  of  a  corporation  capitalized  for  more  than  its  assets  are  actually  worth. 

This  is  a  reprehensible  practice,  and  cannot  but  deceive  all  subsequent  holders  of  the  stock.  Sometimes 
the  Company's  franchise  provides  that  when  their  dividends  exceed  a  certain  per  cent,  of  the  capital  stock,  then 
their  rates  of  tariff  to  the  public  must  be  reduced.  To  avoid  this  the  capital  stock  is  increased  or  watered,  and 
distributed  among  the  stockholders  in  proportion  to  their  holdings,  and  the  rate  of  dividend  is  thereby  reduced. 

Cumulative  stock  is  that  form  of  preferred  stock  on  which  the  company  has  agreed  to  pay  past  dues  and 
unpaid  preferences,  before  paying  any  dividend  on  the  common  stock,  sometimes  preferred  stock  is  written  that 
it  will  participate  in  the  profits  if  any  with  the  common  stock  beyond  the  point  of  preference.  When  this  is  the 
case  the  preferred  stock  is  at  all  times  quoted  higher  on  the  market  than  the  common.  When  the  preferred  stock 
gets  nothing  beyond  the  preferred  point,  then  it  may  be  at  one  time  quoted  higher  and  at  another  time  lower  than 
the  common. 

Treasury  stock  is  the  Company's  own  stock  held  by  them  and  unsold.  The  laws  of  some  states  require  stock 
to  be  fully  taken  before  a  charter  will  be  issued,  but  the  law  provides  for  afterwards  increasing  the  capital  stock, 
and  it  may  be  sold  as  the  money  may  be  needed  in  the  business. 

BONDS. 

Bonds  are  the  written  sealed  obligations  of  an  individual,  corporation  or  municipality.  A  corporation  like 
an  individual  may  wish  to  go  iu  debt  on  an  investment.  Say  it  wishes  to  borrow  $100,000.  It  will  give  a  trust  deed 
to  some  one  as  trustee,  on  its  real  estate  and  other  property.     This  trust  deed  is  conditioned  to  secure  one  hundred 


50 


HOW  BUSINESS  IS   DONE. 


$1000  bonds.  These  bonds  are  payable  to  bearer,  and  draw  a  certain  rate  of  interest.  They  will  be  sold  to  whom- 
soever will  buy  them.  They  are  negotiable  in  form,  being  payable  to  bearer,  and  are  bought  and  sold  on  the 
market.  The  higher  the  rate  of  interest  they  bear  and  the  better  the  security,  the  higher  the  market  value  will  be. 
The  interest  is  usually  payable  semi-annually  or  quarterly.     For  each  payment  of  interest  there  will  be  a  coupon 


mmimm 


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'i&Srrir/an:  and  the  attached  coupons  earn  la  it  authenticated  era*  mynued 'far. smilr.if 
Its  Treasurers  sujnalurr  th  is  tint  day  tfjfommter  All,  KyhleenHundttd  aeedXaieiylkeu. 

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note  attached,  as  in  the  illustration,  and  as  it  becomes  due,  it  will  be  detached  and  presented  for  payment.  A  bond 
having  these  coupons  attached  is  called  a  Coupon  Bond.  If  the  bond  be  taken  to  the  office  of  the  company,  and 
the  name  of  the  owner  and  number  of  the  bond  be  recorded,  the  bond  is  then  said  to  be  a  Registered  Bond.  It  will 
then  only  be  paid  to  the  rightful  holder  thereof.  Companies  sometimes  also  appoint  a  trust  company  to  register 
their  stock.  They  then  have  a  transfer  office  and  a  register  office,  and  the  stock  must  be  presented  at  both  places 
when  a  transfer  is  made. 


HOW  BUSINESS  IS   DONE.  51 

A  Sinking  Fund  is  one  designed  to  gradually  extinguish  a  certain  debt  of  a  corporation.  The  term  is  com- 
mon with  municipal  corporations.  Thus  a  corporation  may  owe  $100000  in  bonds,  due  in  twenty  years.  They  will 
probably  begin  at  once  to  accumulate  a  sinking  fund  to  liquidate  the  obligation  when  due,  for  to  raise  this  amount 
in  a  single  year  may  be  an  impossibility.  A  certain  proportion  of  the  net  earnings  or  incjme  will  be  set  aside  for 
this  purpose. 

First  Mortgage  Bonds  are  secured  by  the  first  mortgage  on  the  property,  and  are  a  lien  prior  to  later  ones. 
There  may  be  several  mortgages  on  the  same  property,  and  each  will  have  priority  in  its  order.  If  it  be  desired  to 
consolidate  these  into  one  large  mortgage,  all  of  whose  bonds  will  be  on  an  equal  footing,  such  bonds  may  be 
called  Consolidated  Bonds.  The  British  Government  did  this  in  its  case,  and  these  bonds  are  called  Consols,  an 
abbreviation  of  Consolidated. 

A  Funded  debt  is  one  that  has  a  permanent  fund  provided  for  its  payment.  Thus  a  municipal  corporation 
may  levy  a  tax  to  pay  the  interest  on  a  certain  debt.  The  term  is  frequently  applied  to  bonds  that  are  floated  at  a 
lower  rate  of  interest  to  raise  money  to  pay  off  bonds  bearing  a  higher  rate. 

An  Unfunded  or  Floating  debt  is  one  that  is  not  secured  by  mortgage,  but  is  of  a  temporary  nature  to  be 
paid  off  with  current  income. 

ABOUT  CORPORATIONS. 

While  the  advantages  of  a  corporation  over  a  partnership  or  even  a  joint  stock  company,  in  many  cases  are 
numerous  and  substantial,  yet  the  well  posted  business  man  will  not  fail  to  bear  in  mind  the  helplessness  of  the 
minority  holders  of  the  stock.  The  holder  of  a  few  shares  is  usually  illy  prepared  on  account  of  lack  of  funds,  to 
protect  himself  against  tne  power  and  influence  of  the  majority.  For  example  :  One  or  more  persons  own  a  safe 
majority  of  the  stock  of  a  company,  and  have  abundant  means  at  their  control  aside  from  this.  The  remainder 
of  the  stock  is  distributed  in  small  holdings  among  people  of  small  means.  The  majority  are  able  to  elect  a 
majority  or  all  of  the  board  of  directors,  and  these  directors  elect  the  officers  who  are  to  manage  the  business  and 
fix  their  salaries.  As  the  business  becomes  more  prosperous,  the  salaries  are  raised,  so  that  there  are  no  dividends 
at  all  or  at  least  very  small  ones.  The  result  is  the  stock  is  depressed  on  the  market,  and  the  small  holders  depend- 
ing in  a  measure  upon  the  dividends,  are  glad  to  sell  out  at  any  price  offered  by  the  majority.  If  they  are  not 
willing  to  sell  out  but  assume  a  belligerent  air,  the  company  can  be  easily  bankrupted  by  bad  or  careless  manage- 
ment. Judgments  may  be  entered  against  the  company.  On  a  sale  of  the  assets  the  majority  having  the  means 
stand  by,  and  purchase  the  entire  business  at  a  low  figure.  They  then  proceed  to  reorganize  it,  leaving  out  the 
smaller  holders.  The  proceeds  of  the  sale  being  barely  sufficient  to  pay  the  indebtedness  of  the  old  company, 
there  is  nothing  left  for  the  original  stockholders.  While  the  above  is  not  the  history  of  all  companies,  yet  it  is 
not  of  unfrequent  occurrence,  and  it  is  well  for  the  business  man  to  understand  the  possibilities  and  responsibilities 
of  the  ownership  of  stock. 

THE  CHICAGO  STOCK  EXCHANGE. 

A  stock  exchange  is  an  organization  to  facilitate  the  dealing  and  trading  in  stocks,  bonds,  and  other  similar 
securities.  The  New  York  Stock  Exchange  is  the  largest  and  by  far  the  most  important  and  influential  of  the 
many  exchanges  of  this  country.  In  recent  years  the  Chicago  Exchange  has  grown  in  importance  and  in  the  vol- 
ume of  its  business,  until  to-day,  it  too,  is  a  power  in  the  field  of  finance.  From  the  fact  that  the  larger  business 
enterprises  are  almost  invariably  corporations  and  that  these  stocks  are  held  by  the  wealthy,  one  has  not  far  to  go 
to  learn  the  secret  of  the  interest  which  these  exchanges  excite  in  the  business  world.  They  differ  some  in  the 
details  of  their  doing  business  but  have  a  general  similarity.  The  Chicago  Stock  Exchange  is  a  joint  stock  com- 
pany whose  membership  is  limited  to  four  hundred  and  forty-five  members.  These  members  are  brokers  who 
buy  and  sell  stocks  and  bonds  in  the  exchange  on  commission,  as  well  as  members  who  deal  on  their  own  account. 
The  government  is  vested  in  a  governing  committee,  consisting  of  a  president  and  twenty-four  members.  The 
initiation  fee  for  members  is  $2,500.  Members  are  not  allowed  to  buy  or  sell  any  stock  or  security  other  than 
government  bonds  at  a  less  variation  than  one-eighth  of  one  per  cent. 

COMMISSIONS. 
Commissions  are  computed  on  the  par  value  of  the  security  and  a  minimum  rate  must  be  charged  in  every 
case.  The  charge  on  stocks  will  not  be  less  than  twelve  and  one-half  cents  per  share,  and  on  bonds  not  less  than 
one-eighth  of  one  per  cent.  The  exceptions  to  these  rules  are  :  Stocks  selling  at  over  $200  per  share,  the  com- 
mission shall  be  twenty  five  cents  per  share.  If  at  or  over  $300  per  share,  the  commission  shall  be  fifty  cents  per 
share.  If  at  or  over  $500  per  share,  one  dollar  per  share.  On  all  sales  of  less  than  fifty  shares  the  commission  is 
double  the  usual  amount,  and  on  all  bond  sales  of  less  than  $5,000  the  commission  is  one-fourth  of  one  per  cent. 
In  no  case  shall  the  commission  be  less  than  $2.00.  The  commission  on  government  bonds  is  one-sixteenth  oi  one 
per  cent. 

TERMS  USED. 

Members  are  of  three  classes  :  The  Scalpers,  or  those  who  buy  and  sell  for  themselves  and  not  on  com- 
mission, and  who  close  up  all  their  trades  each  night.  Speculators  also  deal  for  themselves  but  hold  for  a  rise  or 
decline  as  the  case  may  be.     Commission  Merchants  deal  for  others  on  a  commission,  and  rarely  trade  for  them 


52  HOW  BUSINESS  IS  DONE. 

selves.  Listing  Stock  is  having  it  placed  on  the  list  of  regular  stocks  traded  in  by  the  exchange.  A  company 
desiring  to  have  its  stock  listed,  makes  application  to  the  listing  committee,  in  writing,  stating  all  the  facts  in  ref- 
erence to  the  standing  of  the  company,  time  and  place  of  dividend,  the  address  of  transfer  office  or  offices,  the 
amount  of  indebtedness,  etc.  The  fee  for  listing  is  #100.00.  The  exchange  will  not  call  or  deal  in  the  stock  ol 
any  company,  a  registry  of  whose  stock  is  not  kept  in  some  responsible  bank  or  trust  company,  and  which  will 
not  agree  to  give  at  least  thirty  days'  notice  of  an  intended  increase  in  the  number  of  its  shares. 

It  is  evidently  to  the  advantage  of  a  company  to  have  at  all  times  a  market  value  for  its  stock,  hence  com- 
panies of  any  considerable  capital  are  eager  to  have  their  stock  listed  on  the  exchange.  In  New  York,  stock  to  be 
listed  must  be  engraved  in  steel  and  not  lithographed.  In  fact  it  is  the  custom  to  so  engrave  all  stock  to  be  actively 
traded  in  on  the  Chicago  exchange.  The  list  is  called  daily,  and  bids  and  offers  are  made  for  the  stock  as  called. 
This  is  where  the  "bid"  and  "asked"  quotations  come  from  that  are  quoted  in  the  daily  market  reports. 

A  Margin  is  the  security  given  by  a  customer  to  his  broker  usually  about  5%. 

Settlement  day  is  the  last  day  of  each  month,  when  all  trades  that  were  bought  for  "the  account,"  that  is, 
not  to  be  paid  for  or  delivered  until  settlement  day,  must  be  settled  up. 

A  Bull  is  a  member  who  has  bought  stock  to  hold,  or  for  future  delivery,  and  who  is  therefore  anxious  for 
the  price  to  go  up. 

A  Bear  is  one  who  has  sold  stock  for  future  delivery  and  is  therefore  anxious  for  the  price  to  decline. 

An  operator  is  "short"  when  he  has  sold  stock  he  does  not  possess,  and  "  long"  when  he  has  bought  stock. 

A  Pool  is  a  combination  of  men  who  join  in  an  effort  to  secure  and  maintain  control  of  a  certain  line  of 
stock. 

"  Buyer's  option  "  is  applied  to  a  contract  in  which  the  purchaser  has  the  choice  of  taking  a  stock  within 
a  certain  specified  time.     "Seller's  option  "  is  the  reverse  of  this. 

" To  cover  "  is  to  buy  in  stock  to  fill  a  contract  in  which  the  operator  is  "short."  It  applies  equally  well 
whether  the  trade  has  proven  profitable  or  otherwise. 

A  ' '  limited  order ' '  is  one  given  by  a  customer  to  his  broker  and  which  fixes  a  price  beyond  which  he 
will  not  go.  A  "stop  order"  is  one  given  by  a  customer  when  buying  stock  on  a  margin  to  sell  it  out  if  it 
declines  below  a  certain  point.     It  has  the  effect  of  limiting  the  customers'  risk  on  the  transaction. 

A  Corner  exists  when  a  clique  has  secured  control  of  a  certain  stock  and  then  forces  the  price  far  above  its 
real  value. 

Order. 
order5  good  only  for  the  day  in  which  they  are  given,  unless  specified. 

These  transactions  are  made  subject  to  the  rules  and  customs  of  the  exchange  at  the  place  of  contract,  and  the  right  is  reserved  to 
close  the  transaction  when  the  margins  are  exhausted,  or  nearly  so,  without  giving  further  notice. 

C.  A.  Whyland  &,  Co.,  / 


a.^^ 


METHODS  OF  BUYING. 

When  a  member  buys  or  sells  stocks  or  bonds  "  cash,"  it  means  that  the  securities  are  to  be  delivered,  and 
*.he  cash  paid  the  day  of  the  tfade.  To  buy  or  sell  "  regular,"  means  that  the  settlement  is  to  be  made  the  follow- 
ing day.  To  buy  or  sell  for  "the  account,"  means  that  the  settlement  is  to  be  made  the  last  business  day  of  the 
month.  "Seller  three"  means  the  seller  is  to  have  the  option  to  deliver  the  stock  within  three  days.  "Buyer 
three"  means  the  same  except  that  the  buyer  has  the  option  to  pay  for  and  demand  delivery  within  three  days. 

METHOD  OF  DEALING  IN  SECURITIES. 

A  customer  having  determined  to  deal  in  a  certain  stock,  will  select  a  reliable  broker.  If  he  believes  the 
stock  is  about  to  rise  in  value,  he  will  buy.  If  he  looks  for  a  decline,  he  will  sell.  This  being  settled  in  his  own 
mind,  he  will  write  out  an  order  to  his  broker  on  a  blank  furnished  him  by  the  broker. 


HOW   BUSINESS   IS   DONE. 


53 


This  order  he  will  accompany  by  the  required  margin  of  say  5  or  10%.  If  the  order  be  for  100  shares,  par 
value,  $10000 — the  margin  may  be  $1000.  The  broker  goes  upon  the  floor  of  the  exchange  and  buys  or  sells  the 
stock  either  "cash,"  "regular"  or  for  "the  account"  as  he  may  be  directed.  On  his  return  to  the  office  at  the 
close  of  the  session,  a  confirmatory  notice  is  sent  to  the  customer  notifying  him  of  the  purchase  or  sale.  If  the 
purchase  or  sale  be  cash  the  broker  must  receive  or  deliver  the  stock  at  once.  If  it  be  a  purchase,  when  the  stock 
is  delivered  to  the  broker,  he  will  be  obliged  to  put  in  with  the  margin  sufficient  of  his  own  money  to  pay  for  the 
stock.  The  margin  is  taken  to  protect  the  broker  against  a  possible  decline  in  the  market.  The  broker  retains 
the  security  unless  fully  paid  for  by  the  customer.  In  case  the  broker  should  need  funds,  he. may  hypothecate 
the  stock  for  a  loan  at  the  bank.  The  security  enhancing  in  price,  the  customer  may  give  the  broker  an  order 
to  sell.  A  statement  of  account  will  then  be  rendered  the  customer  by  the  broker.  Interest  will  be  charged  for 
the  amount  of  his  own  money  the  broker  had  in  the  deal,  and  commissions  for  both  buying  and  selling.  At  any 
time,  the  customer  may,  by  paying  the  balance  of  the  purchase  price  demand  the  delivery  of  the  security.  When 
stock  is  delivered,  it  is  endorsed  on  the  back  by  the  holder,  and  must  be  witnessed  by  a  member  of  the  board. 
The  member  witnessing  will  of  course  be  the  broker  for  the  seller.  The  object  is  to  have  the  genuineness  of  the 
certificate  authenticated  by  a  responsible  party.  The  certificate  will  first  be  taken  to  the  transfer  office  and  then 
to  the  register  office. 

In  the  case  shown  in  the  illustrations  an  order  was  given  the  broker  by  D.  J.  Davis,  Sept.  8th,  to  buy  100 
shares  of  Manhattan  Railway  stock.  (See  form.)  A  margin  of  $750  was  required  in  this  case.  This  was  to  pro- 
tect the  broker  in  case  the  stock  should  decline  in  value  while  held  by  him.  The  broker  executed  the  order  at 
once  on  the  floor  of  the  exchange,  buying  the  stock  "regular"  at  84j^.  It  will  be  seen  that  the  broker  was 
obliged  to  put  in  $7,100  of  his  own  money  to  secure  the  stock.  On  the  18th  this  stock  being  quoted  higher  on 
the  exchange  the  customer  gave  an  order  to  the  broker  to  sell,  which  was  done  at  86^.  This  closed  the  transac- 
tion and  a  statement  of  the  account  was  then  rendered  the  customer.  (See  form.)  The  commissions  at,12j£c 
per  share  for  buying  and  12j^c.  for  selling,  amount  to  $25.  The  interest  on  the  purchase  money  is  $14.08,  leav- 
ing a  net  profit  of  $160.92. 

C«pt  with  th«  Dod*rtfindin«  *riih  out  cruitomen,  fft»i  In  all  cimi  cTA-rE-ur-fui- 

nd  sold  by  ut,  U  co»l«o)pUted  and  understood  al*l   LmLrll. 

!&  in  account  with  C.  A.  Whyland  &.  Co. 


STOCKS.  BONOS  AND  LOCAL  SECURITIES, 

10  Pacific  avcnuc,  Chicago.  CR. 


If  the  trade  be  in  bonds,  interest  to  day  of  sale  goes  to  the  seller  in  addition  to  the  sale  price.  In  New  York 
all  unpaid  interest  goes  to  buyer.  Hence  on  New  York  exchange  the  same  bonds  are  always  quoted  higher  than  in 
Chicago,  except  immediately  after  payment  of  interest.  The  price  of  stocks  increases  as  dividend  days  approach 
for  the  dividend  goes  with  them  up  to  day  transfer  office  is  closed  to  make  ready  for  the  dividend. 

A  broker  may  receive  an  order  to  sell  stock,  looking  for  a  decline,  when,  if  the  buyer  should  demand  the 
stock,  it  can  be  bought  at  a  lower  price  to  complete  the  trade.  This  is  called  "  selling  short."  In  some  cases  a 
broker  having  sold  stock  and  having  none  on  hand,  resorts  to  borrowing  it.  He  will  borrow  it  from  a  friend 
leaving  his  check  for  it  at  the  market  price,  with  the  understanding  that  the  stock  will  be  returned  when  demanded. 

To  facilitate  trading  for  "the  account,"  a  clearing  house  department  is  organized.  Like  a  bank  clearing 
house,  this  enables  a  broker  to  substitute  another  broker  in  his  place.  Or  if  he  has  sold  and  bought,  the  one  may 
be  made  to  cancel  the  other. 

The  "ticker"  has  become  an  important  factor  in  stock  exchange  transactions.  The  market  of  stocks  is 
extremely  sensitive  to  outside  influences.  The  demand  for  a  stock  in  Liverpool  or  New  York,  or  a  mere  rumor 
of  a  possible  decline  in  the  earning  power  of  the  corporation  is  information  eagerly  sought  for,  and  has  an  imme- 
diate effect  on  the  price  of  the  stock.    This  information  as  to  sales  in  New  York  is  communicated  by  the  "ticker." 


54  HOW  BUSINESS  IS  DONE. 

These  are  small  instruments  found  in  every  broker's  office,  and  connected  by  wire  with  an  office  of  the  company 
furnishing  them.  Unlike  the  telegraph  instrument,  from  which  the  message  is  taken  by  sound,  the  "ticker" 
prints  it  on  a  narrow  strip  of  paper  that  can  be  read  by  anyone.  These  "tickers"  are  found  on  the  floor  of  the 
stock  exchange,  and  reports  of  sales  are  immediately  made  known  in  all  the  business  centers  of  the  country, 

THE  SPECULATIVE  TRADE. 

Members  of  the  stock  exchange  claim  that  in  every  transaction  on  the  Exchange,  the  actual  delivery  of 
the  security  is  contemplated.  However,  should  one  sell  "short"  and  then  fail  to  make  delivery  as  required  in 
his  contract,  he  is  liable,  as  in  all  cases,  to  pay  damages  for  a  breach  of  his  contract.  The  measure  of  damages 
would  of  course  be  the  difference  between  the  price  of  the  sale  and  the  lesser  market  price  of  the  day. 

Members  claim  a  difference  between  such  transactions  and  those  where  no  delivery  is  ever  contemplated. 
The  latter  are  prohibited  by  the  laws  of  the  State  and  the  rules  of  the  Exchange.  Still  it  must  be  admitted  that 
there  is  considerable  business  done  in  this  manner.  Such  transactions  amount  to  a  wager  in  which  the  buyer 
wagers  that  the  stock  will  appreciate,  and  the  seller  that  it  will  decline.  Much  of  this  sort  of  business  is  done  by 
means  of  "  Puts,"  "Calls"  and  "Straddles." 

A  "  Put "  is  a  contract  wherein  the  maker  of  it  agrees,  within  a  certain  date,  to  make  a  contract  to  take  a 
certain  number  of  shares  of  stock  at  a  certain  price. 

A  "  Call  "  is  the  reverse  of  a  "Put "  and  entitles  the  holder  to  all  advance  above  price  of  call. 

A  "Straddle"  is  the  sale  of  a  privilege  to  either  buy  or  sell.  These,  it  will  be  seen,  each  constitute  a 
privilege,  and  this  privilege  or  option  is  paid  for. 

THE  BOARD  OF  TRADE. 

One  of  the  great  financial  institutions  of  the  west,  and  one  having  a  great  influence  upon  the  destiny  and 
welfare  of  the  whole  people,  is  the  Chicago  Board  of  Trade.  Here  is  the  source  of  market  quotations  on  cereals 
and  hog  products,  and  here  it  is  that  the  grain  dealers  and  producers  of  the  country  look  for  facts  on  which  to 
determine  the  prospects  for  a  rise  or  decline  in  prices  of  grains. 

Much  criticism  has  been  urged  against  the  Board  by  many  well  meaning  people,  and  it  has  even  been 
accused  of  being  a  gambling  institution.  But  this  imputation  is  denied  vigorously  by  its  members.  It  is  claimed 
that  were  it  not  for  the  Board  the  producer  would  be  at  the  mercy  of  the  millers,  who  would  only  buy  as  their 
needs  might  demand.     As  it  is,  the  owner  of  wheat  can  always  find  a  cash  buyer  for  it. 

ORGANIZATION. 

The  Board  of  Trade  was  organized  as  a  corporation  at  a  time  when  special  charters  were  permitted,  and  it 
was  fortunate  enough  to  secure  from  the  legislature  one  of  these  charters  conferring  special  privileges.  The 
objects  of  the  association  are  :  To  maintain  a  commercial  exchange  ;  to  promote  uniformity  in  the  customs  and 
usages  of  merchants  ;  to  inculcate  principles  of  justice  and  equity  in  trade  ;  to  facilitate  the  speedy  adjustment  of 
business  disputes  ;  to  acquire  and  to  disseminate  valuable  commercial  and  economic  information. 

GOVERNMENT. 

The  government  of  the  Board  is  vested  in  a  board  consisting  of  a  president,  two  vice-presidents  and  fifteen 
directors.  The  usual  provisions  are  made  for  different  committees.  The  fee  for  membership  is  $10,000,  but  a 
membership  may  be  bought  up  from  a  member  for  about  $500.     A  transfer  fee  of  $25  is  charged. 

No  one  but  a  member  can  make  any  trades  the  floor  of  the  exchange.  In  fact,  admission  to  the  floor 
is  only  granted  under  strictly  defined  restrictions.  Members  of  the  board  only  deal  on  the  floor  with  members, 
and  a  member  may  act  as  a  broker  only  as  between  other  members.  When  he  represents  an  outsider  he  must 
deal  with  a  member  as  the  principal  to  the  transaction  and  not  as  an  agent.  For  all  transactions,  therefore,  made 
on  the  floor  for  an  outsider,  he  is  personally  responsible. 

COMMISSIONS. 

For  selling  car  load  lots  of  wheat,  rye  and  barley  in  store,  free  on  board  cars  or  vessels,  on  track,  delivered, 
or  to  be  shipped  from  any  other  point,  the  minimum  commission  is  one  cent  per  bushel.  For  selling  car-load  lots 
of  corn  in  store,  corn  otherwise  than  in  store,  oats  in  car-load  lots,  or  for  selling  canal-boat  loads  of  grain  in 
store  afloat,  or  free  on  board  vessels,  one-half  cent  per  bushel.  "In  addition  to  the  foregoing  rates  there 
shall  be  charged  the  legal  rate  of  interest  on  all  advances;  also  the  established  rates  of  insurance  upon  all 
merchandise  held  in  store  or  otherwise  carried." 

For  the  purchase  or  sale,  and  for  the  purchase  and  sale  of  property  for  immediate  or  future  delivery, 
whether  the  contract  for  purchase  or  for  sale  be  first  made,  as  follows:  On  all  kinds  of  grain  in  1,000  and  5,000 
bushel  lots  or  multiples  thereof,  one-fifth  of  one  cent  per  bushel.  On  mess  pork  in  lots  of  50  and  250  barrels  or 
multiples  thereof,  5  cents  per  barrel.  For  the  purchase  and  shipment  of  grain  by  vessel  :  On  rye  and  barley, 
one-half  of  one  cent  per  bushel ;  on  other  grains,  one-quarter  of  one  cent  per  bushel ;  for  the  purchase  and  ship- 
ment of  grain  one-half  cent  per  bushel. 


HOW   BUSINESS    IS   DONE. 


55 


INSPECTION. 

The  grain  and  provision  busiuess  in  Illinois  is  regulated  by  statute.  This  statute  provides  for  a  board  of 
Railroad  and  Warehouse  Commissioners.  This  board  establishes  grades  of  grain  and  provisions  and  appoints 
inspectors  to  examine  and  officially  grade  the  same. 

The  chief  inspector  keeps  a  set  of  books  in  which  is  entered  an  accurate  account  of  all  grain  inspected, 
showing  the  quantity  and  quality  of  each  variety,  and  the  amount  of  inspection  fees  chargeable  thereon.  The 
fees  for  inspection  are  :  For  inspection  on  arrival,  thirty  cents  per  car-load  ;  ten  cents  per  wagon-load ;  forty 
cents  per  thousand  bushels  from  canal  boats  or  vessels;  and  one-fourth  of  one  cent  per  bushel  from  bags.  For  in- 
spection from  store  :  Fifty  cents  per  thousand  bushels  to  vessels;  thirty-cents  per  car-load  to  cars,  and  per  car- 
load to  teams;  or  ten  cents  per  wagon-load  to  teams. 

Certificate  of  Inspection. 


Jcior  of  Oraia 


\<m 


■  i 


Hfl,  k^ 


^l\i<»agO.  -      SEP.  26  1896 


Wis Cal.Dlv.C.&N-W,      Mz^£&»zcU~ 


t&riAgJZgJL 


New 


Three  (3)  Hard  Winter  Wheat* 


oa^^CZ/^/t^u^ 


Gfuefi  Jndfiectct/. 


CLAIMS  FOR  DAMAGTS  AGAINST  INSPECTORS  SHOULD  BE 

FILED  IN  THIS  OFFICE  BEFORE  THE  GRAIN  INSPECTED  SHALL 

HAVE  BEEN  UNLOADED  OR  HAVE  LEFT  THIS  DEPARTMENT. 

REGISTRAR. 

The  Warehouse  Registrar  keeps  a  registration  book  for  each  elevator,  and  in  this  is  entered  a  correct 
list  of  grain  that  is  received.  This  information  is  furnished  by  the  inspector.  When  a  warehouse  receipt  is  re- 
ceived from  the  elevator  by  the  commission  merchant,  it  is  taken  to  the  office  of  the  Registrar  to  be  registered. 
The  Registrar  then  compares  the  receipt  with  the  report  of  the  inspector,  and  if  there  be  no  discrepancy  it  is 
stamped  across  the  face  with  the  Registrar's  stamp.  In  this  way  a  check  is  kept  on  the  Elevator  Co.  to  prevent 
the  issuing  of  fictitious  receipts.  By  the  rules  of  the  Board  of  Trade,  a  warehouse  receipt  from  an  elevator  of 
"Class  A"  must  be  registered  before  it  can  be  legally  tendered  in  settlement  of  a  trade. 

GRADES. 

The  statute  gives  the  Warehouse  Commissioners  power  to  establish  fixed  grades  of  grain  and  of  provisions. 
They  have  established  four  grades  of  wheat  and  corn,  five  for  barley,  and  three  for  oats  and  rye. 

This  classification  is  based  on  the  size,  color  and  plumpness  of  the  grains  and  its  dryness  and  freedom  from 
dirt  or  other  foreign  substances.  Nearly  all  the  grain  traded  in,  and  for  which  quotations  are  made,  is  graded  as 
No.  2. 

SHIPPING  GRAIN. 

A  car  of  grain  will  be  loaded  by  a  western  buyer  for  shipment  to  a  commission  merchant  in  Chicago  ;  the 
railroad  issues  for  it  a  Bill  of  Lading ;  the  shipper  forwards  this  Bill  of  Lading  to  the  consignee.  When  the  grain 
arrives  in  Chicago  it  is  placed  by  the  company  on  their  inspection  tracks,  and  the  consignee  notified.  Here  the 
state  inspector  enters  the  car,  inspects  and  fixes  the  grades  of  the  grain.  A  return  of  this  inspection  is  made  as 
hereinbefore  explained.  At  this  point  also  an  employee  of  the  consignee  takes  a  sample  of  the  grain  from  each 
car,  and  this  sample  is  immediately  shown  on  the  floor  of  the  Exchange,  that  intending  buyers  may  inspect  it.  The 
car  is  held  a  reasonable  time  for  the  orders  of  the  consignee,  who  may  have  sold  it  for  reshipment.  If  not  disposed 
of,  it  will  be  sent  to  an  elevator,  and  there  unloaded  by  the  elevator  company  free  of  charge,  and  a  warehouse 
receipt  is  issued  for  it.  To  avoid  disputes  as  to  weights,  the  Board  of  Trade  has  appointed  an  official  weigh-master, 
and  his  weights  are  accepted  as  binding.  He  issues  a  Weigh  Master's  Certificate.  The  fees  for  weighing  are  paid 
by  the  shipper.  The  warehouse  receipt,  when  registered,  as  has  been  explained,  and  properly  endorsed,  is  then  a 
legal  tender  in  settlement  of  trades  on  the  Exchange.  Dealings  on  the  Board  of  Trade  are  in  fact  dealings  with 
warehouse  receipts. 


56 


HOW  BUSINESS   IS  DONE. 


The  Elevator  Company  will  not  deliver  the  receipt  until  the  expense  bill  duly  receipted  by  the   Railroad 
Company  is  produced.     The  object  of  this  is  apparent. 

Warehouse  Receipt. 


FIVE  THOVSAXD.  &7 


;   .*/  Two  Corn 


fr^/^i/jfaw*/^  Weare  Commiss 

liisheivtyuiifm^  byiheMdersefihismvipuhai  ilietinunhmvimmuiim 
ifiiiiluybrmx/xrtifn.  Lnssbyfin  or/ntiii/it/ at  twuersrisk, 

MynwvmijMtoour  ****  THE  CHICAGORAILWAY 

lirnisni  mus  »/ MiTiitfr 

2t&t 


Secretary. 


jutj&AIMMuuu&f&a&uiJauiJuu^ 


STORAGE  RATES. 

Storage  rates  on  grain  are  ^-cent  for  the  first  ten  days,  and  X-cent  more  for  each  additional  ten  days  or  part 
thereof.  The  rules  of  the  Board  of  Trade  provide  that  |^-cent  storage  must  go  with  the  first  purchase  of  the  grain, 
so  that  the  country  shipper  has  no  storage  to  pay,  providing  he  has  his  grain  sold  within  the  first  five  days  after 
storage  begins  ;  for  in  selling  grain  in  store,  the  seller  must  give  five  days  without  additional  storage  to  the  buyer. 
If  the  shipper  holds  it  from  six  to  fifteen  days,  he  would  be  charged  #-cent  per  bushel  for  the  second  ten  days, 
and  the  buyer  will  pay  for  the  first  ten  days. 

Slip  eor  Margin  Deposit. 


J^Jorth-Western  National  Bank. 

Chicago,  Cx?/K&j?,  188.4 


MARGIN  CERTIFICATES  WANTED 


1 3,000-4- 1  a-'8 


FOR  DEPOSITOR  AND 


'<^W^^ur^ryP~^\  ftftf. 


^^d>^? 


ZZS. 


/JW. 


J^orth-Western  National  Bank. 


Criicago,- 


^/r^yi  ma  ^ 


MR.  GEORGE  F.  STONE, 

Sec'y  Board  of  Trade  of  1h 


of  Chicago 


'^£Z&lZ- 


hai^deposited   approved   check   for    Margin   Certificate^^  which  we 
will' issue  to-day  in  accordance  with  your  rules  as  follows- 

FOR    DEPOSITOR   AND 


Entere 


Total,  $    &£>  00 


^to^&^Ti...,. 


Total.  $  <g£C& 


k 


^MM^, 


Teller 


THE  CUSTOMER. 


A  person  having  determined  to  buy  or  sell  grain  on  the  Board  will  select  a  reliable  broker,  and  give  him  an 
order  to  buy  or  sell  as  the  case  may  be.  The  order  may  be  for  a  fixed  price  or  at  the  market  price.  Grain  may  be 
bought  for  delivery  any  given  month,  and  most  of  the  contracts  are  for  future  delivery.  May,  September  and 
December  are  the  favorite  months  for  which  grain  is  bought  for  delivery.  Thus  "May  wheat"  means  wheat  bought 
for  delivery  any  day  of  the  following  May.  In  case  a  purchase  is  for  "  cash,"  it  shall  if  purchased  before  1 :15  P.M. 
be  deliverable  before  2:30  P.  M.  same  day. 

When  grain  is  bought  for  delivery  in  a  certain  month,  it  is  deliverable  any  day  of  that  month  on  which  the 
Board  holds  a  session,  at  the  option  of  the  seller. 


HOW   BUSINESS  IS   DONE. 


57 


Having  received  the  order,  the  broker  will  go  upon  the  Board  and  execute  it.  If  the  order  be  to  purchase 
or  sell  at  the  market  price,  there  will  be  no  difficulty  in  executing  it,  but  if  to  buy  or  sell  at  or  below  a  stated  figure 
it  may  be  impossible. 

ON  THE  BOARD. 

The  method  of  doing  business  on  the  Board  is  much  the  same  as  on  the  Stock  Exchange.  There  are  several 
"pits"  on  the  floor,  each  being  the  center  for  trading  in  a  certain  kind  of  grain.  Thus  there  is  the  "Wheat  Pit," 
and  the  "  Provision  Pit,"  etc. 

Each  broker  holds  in  his  hand  a  small  card  called  a  "bought  and  sold"  card.  This  card  is  ruled  into  col- 
umns. On  the  one  side  he  records  his  sales  and  the  other  his  purchases.  The  broker  he  deals  with  does  the  same. 
This  memorandum  consists  of  the  amount  and  kind  of  grain,  when  deliverable,  name  of  broker  bought  of  or  sold 
to,  the  price  and  the  number  (not  the  name)  of  the  customer  for  whom  the  contract  was  made. 

At  the  close  of  the  day  these  cards  are  returned  to  the  office,  and  handed  to  clerks  to  enter  up.  To  each 
customer  will  be  sent  a  "confirmatory  notice"  giving  a  list  of  trades  made  for  him  that  day,  and  to  each  fellow- 
broker  with  whom  he  has  had  trades  that  day,  he  will  also  send  a  small  slip  giving  a  list  of  their  trades  for  the  day. 
These  Confirmation  Slips  are  the  only  vouchers  that  pass  between  brokers. 

Confirmation  Slips. 


Chicago, 18 

We  hereby  confirm  PURCHASES  made  by  us 
to-day,  under  the  rules  of  the  Chicago  Board  of  Trade, 
as  follows,  of 


Chicago, 18 

IVe  hereby  confirm  SALES  'made  by  us  to-day, 
under  the  rules  of  the  Chicago  Board  of  Trade,  as  fol- 
lows, to 


Amount. 

Kind  of  Property. 

Delivery. 

Price. 

Amount 

Kind  of  Property. 

Delivery. 

• 

Price. 

• 

1 

COUNSELMAN  &  DAY, 


SCHWARTZ,  DUPEE  &  CO., 


Per 


Per 


Should. a  broker  receive  grain  bought  for  a  customer  he  would  be  obliged  to  pay  for  it  largely  with  his  own 
money,  but  he  can  easily  hypothecate  the  warehouse  receipts  at  the  bank  where  they  will  advance  him  90%  of  the 
market  value  of  the  grain  represented.  Should  the  price  decline  he  would  be  obliged  to  refund  on  call  a  portion 
of  the  loan  to  keep  the  security  good.     A  large  business  is  done  in  these  demand  loans  at  the  Chicago  banks. 

We  have  seen  that,  as  between  the  broker  and  the  customer,  the  broker  demands  a  margin  to  cover  fluctua" 
tions  in  the  market.  If  grain  is  bought  for  a  customer  and  the  market  declines,  the  broker  may  "call"  for  more 
margin,  and  when  it  declines  to  the  amount  of  the  margin  already  up,  the  broker  is  privileged  to  sell  the  grain 
and  close  the  deal.  It  must  be  borne  in  mind  that  as  between  the  brokers  they  act  as  principals  and  not  as  agents. 
The  rules  of  the  Board  also  permit  each  broker  to  a  deal  to  require  the  other  to  put  up  a  margin  or  security  that 
he  can  and  will  fulfill  his  contract  at  maturity.  This  security  of  10%  may  be  deposited  with  the  treasurer  of  the 
association  or  with  an  approved  bank.  When  deposited,  the  bank  issues  a  special  certificate  Oa' deposit,  and  sends 
a  notice  of  the  same  to  the  secretary  of  the  Board  of  Trade. 

The  current  market  value  of  property  traded  in  is  conspicuously  posted  each  day  in  the  settlement  room. 
This  serves  as  a  basis  for  the  adjustment  of  all  contracts  settled  on  that  day. 


58  HOW  BUSINESS  IS  DONE. 

THE   OPEN    BOARD. 

The  Open  Board  is  a  separate  organization  from  the  regular  Board,  but  while  the  smallest  order  that  will  be 
considered  on  the  regular  Board  is  five  thousand  bushels,  an  order  for  one  thousand  will  be  accepted  on  the  open 
Board. 

BUCKET   SHOPS. 

On  the  Board  an  actual  delivery  of  the  grain  or  produce  is  contemplated,  but  there  has  sprung  up  a  class  of 
dealers,  keepers  of  "  Bucket  Shops,"  where  no  delivery  is  contemplated.  No  grain  is  bought  or  sold.  The  specu- 
lator gives  his  order  to  one  of  these  Bucket  Shop  keepers,  but  the  order  is  simply  a  wager  that  the  grain  will 
advance  or  decline,  as  the  case  may  be.  The  Bucket  Shop  charges  a  commission  and  is  in  fact,  at  the  same  time, 
the  other  party  to  the  contract.  The  quotations  are  taken  from  the  regular  Board  by  means  of  "tickers."  They 
are  called  Bucket  Shops  on  account  of  the  small  orders  they  will  accept. 

TERMS. 

The  terms  used  on  the  Board  are  in  most  cases  the  same  as  on  the  Stock  Exchange  and  will  be  found  on 
page  74. 

CLEARING  HOUSE. 

As  has  been  said,  the  brokers  deal  among  themselves  as  principals.  They  have  frequent  dealings  with  each 
other  and  to  facilitate  settlements  among  themselves  they  have  organized  a  Clearing  House  department.  This  is 
conducted  somewhat  like  the  regular  clearing  house  and  the  balance  against  a  member  is  settled  by  a  certified  check 
A  clearing  house  sheet  is  ruled  for  debits  and  credits  and  has  on  it  the  names  of  all  members.  This  sheet  is  filled 
out  at  the  office  and  accompanied  by  a  certified  check  for  a  debit  balance  is  sent  to  the  clearing  house  department 
daily.     A  small  fee  is  charged  for  each  settlement. 

POSTAL   LAWS  AND   REGULATIONS. 
« 

Domestic  mail  matter  is  divided  into  four  classes:  first,  second,  third  and  fourth. 

FIRST   CLASS. 

First  class  matter  consists  of  letters,  postal  cards,  and  all  matter  wholly  or  partially  in  writing,  whether 
sealed  or  unsealed  (except  manuscript  copy  accompanying  proof  sheets  of  the  same).  All  matter  sealed 
or  otherwise  closed  against  inspection  is  also  of  the  first  class. 

The  Rate  for  first  class  matter  is  two  cents  per  ounce  or  fracion  thereof.  Postal  cards  one  cent  each. 
Drop  letters  two  cents  per  ounce  or  fraction  thereof  when  mailed  at  letter  carriers  offices,  and  one  cent  for  each 
ounce  or  fraction  thereof  at  offices  where  free  delivery  is  not  established. 

SECOND   CLASS. 

Second  class  matter  is  newspapers  and  other  periodical  publications  which  are  issued  at  stated  intervals, 
and  as  frequently  as  four  times  per  year. 

The  Rate  on  second  class  mater  when  sent  by  the  publisher  from  the  office  of  publication  or  when  sent 
from  a  news  agency  to  actual  subscribers  or  to  other  news  agents,  is  one  cent  per  pound  or  fraction  thereof. 
When  sent  by  other  than  the  publisher  or  news  agent  the  rate  is  one  cent  for  each  four  ounces  or  fraction  thereof. 
The  rate  on  newspapers  (except  weeklies)  and  periodicals  not  exceeding  two  ounces  in  weight  when  deposited  in 
a  letter  carrier  office  for  delivery  by  its  carriers,  is  uniform  at  one  cent  each  ;  if  weighing  more  than  two  ounces 
two  cents  each.  Newspapers  (other  than  weeklies)  and  periodicals,  when  deposited  by  other  than  publishers  or 
news  agents  in  a  letter  carrier's  office,  for  delivery  by  them,  are  charged  one  cent  for  four  ounces  or  fractional 
part  thereof. 

THIRD   CLASS. 

Third  class  matter  is  bo  >ks,  circulars  and  other  matter  wholly  in  print  (not  included  in  second  class  matter) 
proof  sheets,  corrected  proof  sheets  and  manuscript  copy  accompanying  the  same. 

"  Printed  matter"  is  the  reproduction  of  characters  upon  paper  by  any  process  except  that  of  handwriting, 
not  having  the  character  of  an  actual  correspondence. 

A  circular  is  a  printed  letter,  which  according  to  internal  evidence,  is  being  sent  in  identical  terms  to  several 
persons.     The  date,  name  of  addressee  and  sender  may  be  inserted  and  it  is  still  a  circular. 

The  Rate  of  postage  on  third  class  matter  is  one  cent  for  each  two  ounces  or  fractional  part  thereof. 

FOURTH    CLASS. 

Fourth  class  matter  is  merchandise  and  all  matter  not  included  in  the  preceding  classes. 
The  Rate  on  fourth  class  matter  is  one  cent  an  ounce  or  fractional  part  thereof. 


HOW   BUSINESS   IS  DONE  59 

FIRE  INSURANCE. 

Almost  every  one,  sooner  or  later,  becomes  the  holder  of  a  fire  insurance  policy.  The  rights  and  duties  of  a 
holder  are  then  of  importance  to  him. 

The  business  of  insuring  against  loss  by  fire  is  almost  wholly  done  by  large  corporations.  These  corpora- 
tions have  an  organization  among  themselves  called  "  The  Board  of  Underwriters,"  for  the  purpose  of  fixing  rates. 
A  Company  which  is  a  member  of  this  orgauization  is  called  a  Board  Company.  A  local  board  is  maintained  by 
the  local  agents  of  aim  st  every  hamlet.  The  State  Board  sends  a  committee,  composed  of  skilled  members  to  a 
village,  and  each  business  block  is  rated.  A  rate  is  also  placed  on  the  contents  of  each  story.  No  Board  Company 
is  permitted  to  take  a  risk  at  less  than  the  board  rate. 

The  contract  between  the  insured  and  the  insurers  is  the  Policy  ;  consequently  the  holder  of  a  policy  should 
read  it  carefully.  It  matters  not  what  the  agent  may  have  said  the  policy  insured  against,  the  policy  itself  is  still 
the  only  thing  that  may  be  used  to  determine  the  contract.  The  policy  is  valid  if  delivered,  even  if  the  premium 
be  not  paid.     The  insured  must  have  an  insurable  interest  in  the  property  at  the  time  the  policy  is  written. 

A  policy  not  permitting  repairs  will  be  rendered  void  during  the  tjme  repairs  are  being  made,  but  the  weight 
of  decisions  is  that  the  liability  will  begin  again  when  the  repairs  cease,  unless  the  repairs  have  materially  changed 
the  character  of  the  risk. 

If  you  hold  a  mortgage  on  a  piece  of  property  consisting  partly  of  buildings,  you  should  see  to  it  that  the 
mortgage  contains  a  provision  requiring  the  mortgagor  to  keep  the  buildings  insured  for  a  certain  sum,  and  in 
your  favor.  This  provision  should  further  give  you  the  authority  to  insure  it  if  the  mortgagor  does  not,  and  to  add 
the  cost  thereof  to  the  mortgage  debt.  The  language  of  such  a  policy  is:  "Loss  if  any  on  this  policy  payable  to 
A.  B.,  mortgagee,  as  his  interest  may  appear."  It  is  usual  to  write  a  policy  for  three  years  for  twice  the  rate  foi 
one  year ;  or  for  five  years  for  three  times  the  rate  for  one  year.  If  you  sell  property  that  is  insured  the  policy 
should  be  cancelled  at  once,  or  transferred  by  consent  of  the  company  to  the  buyer;  otherwise,  in  case  of  a  loss  by 
fire,  the  company  will  not  be  obliged  to  pay  any  one.  If  you  take  a  policy  for  a  long  term  you  may  cancel  it  at 
any  time,  and  ask  for  a  refund  of  the  unearned  premium.  The  company  will  retain  for  the  period  the  policy  is  in 
force  at  the  high  rate  of  a  short  term,  and  refund  you  the  balance.  The  company  also  has  the  right  to  cancel  the 
policy  on  giving  the  insured  a  notice  sufficient  to  enable  him  to  place  his  insurance  elsewhere.  When  the 
company  cancels  the  policy,  the  refund  is  pro  rata  of  the  term. 

There  are  four  clauses  that  are  frequently  inserted  by  insurance  companies  in  policies,  and  it  is  very  import- 
ant that  the  holder  of  a  policy  should  understand  their  meaning  and  effect.  They  are  known  as  follows:  The  75 
per  cent  co-insurance  clause;  the  %  loss  cause;  the  ^  value  clause;  and  the  Average  clause. 

THE  75  PER  CENT.  CO-INSURANCE  CLAUSE. 

Reads  as  follows:  "It  is  a  part  of  the  consideration  of  this  policy,  and  the  basis  upon  which  the  rate  of 
premium  is  fixed,  that  the  assured  shall  at  all  times  maintain  a  total  insurance  on  the  property  insured  by  this 
policy  of  not  less  than  75  per  cent  of  the  total  cash  value  thereof,  (as  covered  under  the  several  items  of  the 
policy),  and  that  failing  to  do  so,  the  assured  shall  become  a  co-insurer  to  the  extent  of  such  deficiency,  and  in 
that  event  shall  bear  his  proportion  of  any  loss  occurring  under  this  policy."  Under  this  clause,  when  the  sum 
insured  is  less  than  75  per  cent  of  the  value  of  the  property,  and  the  loss  is  less  than  the  amount  insured,  then 
the  company  will  pay  such  a  proportion  of  the  loss  as  the  face  of  the  policy  bears  to  75  per  cent  of  the  value  of 
the  property. 

THE  THREE-QUARTER  LOSS  CLAUSE. 

This  clause  inserted  in  many  country  policies  is  as  follows:  "  It  is  agreed  and  understood  to  be  a  condition 
of  this  insurance  that  in  case  of  any  loss  or  damage  under  this  policy  this  company  shall  not  be  liable  for  an  amount 
greater  than  three-fourths  of  said  loss,  not  exceeding  the  sum  herein  named,  the  other  one-fourth  to  be  bourne  by 
the  insured;  and  in  the  event  of  other  insurance  on  the  property  covered  by  this  policy,  this  company  shall  not  be 
liable  for  more  than  its  proportion  of  three-fourths  of  such  loss  or  damage."  It  is  the  evident  intention  to  make 
the  owner  lose  one-fourth  of  any  loss  that  may  occur.  Under  the  75  per  cent  co-insurance  clause  the  owner  can 
recover  for  the  entire  loss  up  to  the  amount  of  policies,  provided  he  keeps  policies  in  force  to  the  amount  of  75  per 
cent  of  the  value;  but  under  the  three-quarter  loss  clause  he  cannot  in  any  event  save  himself  from  loss 
should  one  occur. 

THE  THREE-QUARTER  VALUE  CLAUSE. 

This  reads  :  "  It  is  understood  and  agreed  to  be  a  condition  of  this  insurance  that  in  the  event  of  loss  or 
damage  by  fire  to  the  property  under  this  policy,  this  company  shall  not  be  liable  for  an  amount  greater  than 
three-fourths  of  the  actual  cash  value  of  each  item  of  property  insured  by  this  policy,  (not  exceeding  the  amount 
insured  on  such  item),  at  the  time  immediately  preceding  such  loss  or  damage;  and  in  the  event  of  additional 
insurance — if  any  is  permitted  hereon,  then  this  company  shall  be  liable  for  its  proportion  only  of  three-fourths 
such  cash  value  of  each  item  insured  at  the  time  of  the  fire,  not  exceeding  the  amount  insured  on  each  such  item." 
Under  this  clause  the  insured  will  get  the  full  value  of  his  loss  if  it  be  equal  to  or  below  three-fourths  of  its  vaiue, 
but  under  the  three-quarter  loss  clause  he  would  not. 


62  REVIEW   QUESTIONS. 

44.  If  a  bank,  other  than  your  own,  notifies  you  that  it  has  for  collection  your  note,  what  is  the  best  method  of 

paying  it  ? 

45.  What  form  of  endorsement  must  row  be  used  when  depositing  checks,  bank  drafts,  etc.? 

46.  What  recent  changes  have  been  made  in  this,  and  why? 

47.  Explain  how  you  would  proceed  if  you  wished  to  purchase  a  bank  draft  on  New  York  ? 

48.  In  whose  favor  is  it  best  to  have  such  drafts  drawn,  and  why  ? 

49.  What  is  done  with  bank  drafts  wheu  they  are  paid  ? 

50.  Why  does  one  bank  have  the  right  to  draw  on  another  ? 

51.  What  bank  drafts  are  in  most  frequent  use  and  why  ? 

52.  You  have  purchased  a  bank  draft  for  $100  payable  to  your  own  order  and  desire  to  remit  it  to  Buck,   Whit- 

more  &  Co.,  Scranton,  Pa.;  what  form  of  endorsement  is  preferable,  and  why  ? 

53.  Write  the  form  of  endorsement  proper  when  you  are  leaving  a  note  with  a  collection  agency  for  collection. 

54.  Why  is  this  form  the  best  ? 

55.  Write  an  endorsement  designed  to  transfer  the  title  to  the  paper,  but  to  incur  no  liability. 

56.  Suppose  you  receive  a  check  payable  to  order  and  it  is  endorsed,  Pay  (your  name)  and  signed.     Is  this  check 

still  negotiable  ? 

57.  You  hold  H.  T.  Clarke's  note  for  f  500,  and  it  is  past  due.     He  pays  you  $125  as  part  payment  on  Nov.  25 

1896.     Write  the  endorsement  for  it. 

58.  What  is  the  objection  to  endorsing  another's  paper? 

59.  What  is  the  objection  to  exchanging  notes  ? 

60.  You  have  notes  not  yet  due  and  are  in  want  of  ready  cash.     Describe  two  methods  of  raising  money  on  these 

notes. 

61.  Write  all  the  forms  necessary  to  complete  No.  60. 

62.  What  is  a  Judgment  Note  and  why  is  it  ta  be  preferred  to  an  ordinary  note  ? 

63.  What  would  be  your  objection  to  giving  such  a  note  ? 

64.  Write  J.  A.  Stephen's  draft  at  15  days'  sight  for  $326.24  on  yourself. 

65.  Accept  the  above  draft  dating  your  acceptance  the  day  following  the  date  of  the  draft. 

66.  Why  should  some  drafts  be  presented  for  acceptance  ? 

67.  What  drafts  need  not  be  accepted  ? 

68.  Write  an  acceptance  payable  at  your  bank. 

69.  What  is  the  object  of  making  an  acceptance  payable  at  your  bank  ? 

70.  Is  the  practice  to  be  commended  ? 

71.  H.  H.  Garver,  of  Peoria,  111.,  owes  you  on  account  past  due  $56.25.     How  would  you  proceed  to  collect  thii 

by  means  of  a  draft  ? 

72.  Draw  the  above  draft  and  make  the  proper  endorsement,  if  any. 

73.  Why  is  a  draft  in  the  above  case  more  apt  to  be  honored  than  an  ordinary  dunning  letter? 

74.  To  what  bank  would  you  send  the  above  draft  ? 

75.  Is  there  more  than  one  way  of  handling  it,  and  if  so,  what  is  the  other  ? 

76.  A  customer  orders  from  you  $58.50  worth  of  goods  and  directs  you  to  draw  on  him  through  his  bank  for  the 

amount  of  the  bill.     Explain  fully  how  you  would  do  it. 

77.  In  what  ways  can  money  be  remitted  ? 

78.  Nothing  being  said  to  the  contrary  where  is  a  debt  due,  at  the  debtor's  place  of  business  or  at  the  creditor's? 

79.  Suppose  you  remit  B,  of  Denver,  to  balance  your  account  and  the  letter  is  lost ;  whose  loss  is  it  ? 

80.  When  is  it  permissible  to  remit  stamps  ? 

81.  When  is  a  registered  letter  a  proper  means  to  remit  money  ? 

82.  In  case  of  the  loss  of  a  registered  letter  who  would  be  the  loser  ? 

83.  What  is  the  fee  for  registering  a  letter  and  may  a  package  be  registered  ? 

84.  Under  what  circumstances  are  registered  letters  most  used  ? 

85.  When  is  it  proper  to  send  a  creditor  your  personal  check  and  when  not? 

86.  Why  is  the  receipt  of  personal  checks  so  annoying  to  a  wholesale  house  ? 

87.  When  may  a  personal  draft  be  sent  on  account  ? 

88.  What  is  there  to  commend  a  bank  draft  in  remitting  ? 

89.  What  bank  drafts  are  most  generally  accepted  at  par,  and  why  ? 

90.  What  is  the  cost  of  a  bank  draft  ? 

91.  What  is  the  maximum  amount  for  which  a  postal  order  will  be  issued  ? 

92.  What  are  the  advantages  and  disadvantages  in  using  a  postal  order? 

93.  How  do  you  prepare  a  postal  order  for  deposit  in  a  bank  ? 

94.  How  far  is  a  postal  order  negotiable  ? 

95.  What  are  express  orders  and  for  what  can  they  be  used  ? 

96.  For  what  amounts  may  they  be  had  ? 

97.  How  far  are  they  negotiable  ? 

98.  Why  can  you  not  re-send  a  postal  order  that  has  been  sent  you  ? 

99.  Can  you  re-send  an  express  order  that  has  been  sent  you  ? 


REVIEW  QUESTIONS.  63 

100.  When  would  you  call  upon  an  express  company  to  transport  money  for  you  ? 

101.  How  is  money  sent  by  telegraph? 

102.  By  whom  is  this  service  given  ? 

103.  Can  money  be  so  sent  everywhere? 

104.  Explain  why  suburban  banks  sometimes  have  a  notice  on  their  checks  that  they  are  payable  through  the 

city  clearing  house. 

105.  Why  would  a  suburban  bank  check  not  having  such  a  provision  not  pass  at  par  in  the  city  ? 

106.  Draw  a  check  on  your  bank  for  money  for  your  own  use. 

107.  Draw  a  check  on  your  bank  that  a  messenger  may  go  and  get  it  without  being  identified. 

108.  What  is  "  Kiting,"  how  is  it  done,  and  how  do  banks  regard  the  custom? 

109.  Are  lhe  words  "  value  received  "  necessary  to  the  validity  of  negotiable  paper? 

110.  Write  a  joint  note. 

111.  Write  a  joint  and  several  note. 

112.  Give  the  rule  for  computing  time  in  a  negotiable  paper. 

113.  What  are  safety  deposit  vaults  and  how  are  they  conducted  ? 

114.  What  forms  of  money  are  full  legal  tender? 

11").  What  forms  are  not  legal  tender  for  any  amount? 

116.  For  what  amount  are  dimes  a  legal  tender  ? 

117.  For  what  amount  are  pennies  a  legal  tender  ? 

118.  You  purchase  in  a  store  a  bill  of  goods  for  $7.65  and  offer  in  payment  half  dollars,  quarters  and  dimes,  must 

the  seller  accept  the  coins  ?     Why  ? 

119.  What  is  the  effect  of  making  a  good  tender  ? 

120.  How  do  you  make  a  proper  tender. 

121.  A  owes  you  on  account  $55.67.     What  advantages  if  any,  would  there  be  in  getting  his  note  for  the  amount? 

122.  What  disadvantages  if  any,  would  there  be? 

123.  What  is  a  national  bank  ? 

124.  What  is  a  bank  of  issue  ? 

125.  Can  a  state  bank  be  a  bank  of  issue  ? 

126.  Explain  how  and  on  what  terms  national  banks  are  permitted  to  issue  bank  bills. 

127.  When  must  national  banks  make  report  and  to  whom  ? 

128.  What  is  a  bank  examiner  and  what  are  his  duties  ? 

129.  To  what  extent  may  national  banks  hold  real  estate : 

130.  What  is  meant  by  the  "  legal  reserve,"  and  how  much  is  it  ? 

131.  What  is  the  liability  of  a  stockholder  in  a  national  bank  ? 

132.  What  is  the  redemption  fund,  where  is  it  kept,  how  much  is  it,  and  what  is  its  object? 

133.  How  is  the  surplus  fund  made  up  ? 

134.  What  are  the  qualifications  of  a  national  bank  director  ? 

135.  To  what  extent  is  his  a  responsible  position,  and  how  might  he  become  personally  liable? 

136.  What  restrictions,  if  any,  are  there  on  the  amount  of  the  capital  stock  ? 

137.  What  is  a  savings  bank,  and  wherein  does  it  differ  from  a  national  bank  ? 

138.  Under  what  laws  are  they  organized  ? 

139.  How  many,  and  what  plans  of  organization  are  there  ? 

140.  Which  is  preferable,  and  why  ? 

141.  Explain  fully  the  mutual  plan  of  organization. 

142.  How  do  savings  and  national  banks  differ  in  the  character  of  their  investments? 

143.  Do  savings  banks  make  a  large  profit  ? 

144.  How  may  a  savings  bank  be  useful  to  the  community  ? 
145  How  is  money  deposited  in  a  savings  bank  ? 

146.  How  is  money  withdrawn  from  a  savings  bank  ? 

147.  Why  cannot  the  active  business  man  use  a  savings  bank  account  ? 

148.  What  are  trust  Companies,  and  under  what  laws  are  they  organized  ? 

149.  What  business  may  a  trust  company  do  for  you  ? 

150.  If  you  were  appointed  administrator  for  an  estate,  how  would  you  care  for  the  money  of  the  estate  ? 

151.  Name  the  different  kinds  of  paper  money  we  have  in  circulation. 

152.  Describe  the  Greenback,  tel)  what  it  is,  how  it  is  secured,  and  how  many  there  are  in  circulation. 

153.  For  what  is  it  a  legal  tender? 

154.  Describe  the  Treasury  Note,  tell  what  it  is,  how  it  is  secured,  and  how  many  there  are  in  circulation. 

155.  What  are  Silver  Certificates,  how  are  they  secured,  and  how  many  are  there  in  circulation  ? 

156.  How  may  they  be  obtained,  and  are  they  a  legal  tender  ? 

157.  How  does  the  face  of  a  Greenback  read  ? 

158.  How  does  the  face  of  a  Treasury  note  read  ? 

159.  How  does  the  face  of  a  Gold  Certificate  read  ? 

160.  How  does  the  face  of  a  Silver  Certificate  read  ? 


62  REVIEW   QUESTIONS. 

44.  If  a  bank,  other  than  your  own,  notifies  you  that  it  has  for  collection  your  note,  what  is  the  best  method  of 

paying  it  ? 

45.  What  form  of  endorsement  must  row  be  used  when  depositing  checks,  bank  drafts,  etc.? 

46.  What  recent  changes  have  been  made  in  this,  and  why  ? 

47.  Explain  how  you  would  proceed  if  you  wished  to  purchase  a  bank  draft  on  New  York  ? 

48.  In  whose  favor  is  it  best  to  have  such  drafts  drawn,  and  why  ? 

49.  What  is  done  with  bank  drafts  when  they  are  paid  ? 

50.  Why  does  one  bank  have  the  right  to  draw  on  another  ? 

51.  What  bank  drafts  are  in  most  frequent  use  and  why  ? 

52.  You  have  purchased  a  bank  draft  for  $100  payable  to  your  own  order  and  desire  to  remit  it  to  Buck,   Whit- 

more  &  Co.,  Scrantou,  Pa.;  what  form  of  endorsement  is  preferable,  and  why  ? 

53.  Write  the  form  of  endorsement  proper  when  you  are  leaving  a  note  with  a  collection  agency  for  collection. 

54.  Why  is  this  form  the  best  ? 

55.  Write  an  endorsement  designed  to  transfer  the  title  to  the  paper,  but  to  incur  no  liability. 

56.  Suppose  you  receive  a  check  payable  to  order  and  it  is  endorsed,  Pay  (your  name)  and  signed.     Is  this  check 

still  negotiable  ? 

57.  You  hold  H.  T.  Clarke's  note  for  $500,  and  it  is  past  due.     He  pays  you  $125  as  part  payment  on  Nov.  25 

1896.     Write  the  endorsement  for  it. 

58.  What  is  the  objection  to  endorsing  another's  paper? 

59.  What  is  the  objection  to  exchanging  notes  ? 

60.  You  have  notes  not  yet  due  and  are  in  want  of  ready  cash.     Describe  two  methods  of  raising  money  on  these 

notes. 

61.  Write  all  the  forms  necessary  to  complete  No.  60. 

62.  What  is  a  Judgment  Note  and  why  is  it  to  be  preferred  to  an  ordinary  note  ? 

63.  What  would  be  your  objection  to  giving  such  a  note  ? 

64.  Write  J.  A.  Stephen's  draft  at  15  days'  sight  for  $326.24  on  yourself. 

65.  Accept  the  above  draft  dating  your  acceptance  the  day  following  the  date  of  the  draft. 

66.  Why  should  some  drafts  be  presented  for  acceptance  ? 

67.  What  drafts  need  not  be  accepted  ? 

68.  Write  an  acceptance  payable  at  your  bank. 

69.  What  is  the  object  of  making  an  acceptance  payable  at  your  bank  ? 

70.  Is  the  practice  to  be  commended  ? 

71.  H.  H.  Garver,  of  Peoria,  111.,  owes  you  on  account  past  due  $56.25.     How  would  you  proceed  to  collect  thii 

by  means  of  a  draft  ? 

72.  Draw  the  above  draft  and  make  the  proper  endorsement,  if  any. 

73.  Why  is  a  draft  in  the  above  case  more  apt  to  be  honored  than  an  ordinary  dunning  letter? 

74.  To  what  bank  would  you  send  the  above  draft  ? 

75.  Is  there  more  than  one  way  of  handling  it,  and  if  so,  what  is  the  other  ? 

76.  A  customer  orders  from  you  $58.50  worth  of  goods  and  directs  you  to  draw  on  him  through  his  bank  for  the 

amount  of  the  bill.     Explain  fully  how  you  would  do  it. 

77.  In  what  ways  can  money  be  remitted  ? 

78.  Nothing  being  said  to  the  contrary  where  is  a  debt  due,  at  the  debtor's  place  of  business  or  at  the  creditor's  ? 

79.  Suppose  you  remit  B,  of  Denver,  to  balance  your  account  and  the  letter  is  lost ;  whose  loss  is  it  ? 

80.  When  is  it  permissible  to  remit  stamps  ? 

81.  When  is  a  registered  letter  a  proper  means  to  remit  money  ? 

82.  In  case  of  the  loss  of  a  registered  letter  who  would  be  the  loser  ? 

83.  What  is  the  fee  for  registering  a  letter  and  may  a  package  be  registered  ? 

84.  Under  what  circumstances  are  registered  letters  most  used  ? 

85.  When  is  it  proper  to  send  a  creditor  your  personal  check  and  when  not  ? 

86.  Why  is  the  receipt  of  personal  checks  so  annoying  to  a  wholesale  house  ? 

87.  When  may  a  personal  draft  be  sent  on  account  ? 

88.  What  is  there  to  commend  a  bank  draft  in  remitting? 

89.  What  bank  drafts  are  most  generally  accepted  at  par,  and  why  ? 

90.  What  is  the  cost  of  a  bank  draft  ? 

91.  What  is  the  maximum  amount  for  which  a  postal  order  will  be  issued  ? 

92.  What  are  the  advantages  and  disadvantages  in  using  a  postal  order? 

93.  How  do  you  prepare  a  postal  order  for  deposit  in  a  bank  ? 

94.  How  far  is  a  postal  order  negotiable  ? 

95.  What  are  express  orders  and  for  what  can  they  be  used  ? 

96.  For  what  amounts  may  they  be  had  ? 

97.  How  far  are  they  negotiable  ? 

98.  Why  can  you  not  re-send  a  postal  order  that  has  been  sent  you  ? 

99.  Can  you  re-send  an  express  order  that  has  been  sent  you  ? 


REVIEW  QUESTIONS.  63 

100.  When  would  you  call  upon  an  express  company  to  transport  money  for  you  ? 

101.  How  is  money  sent  by  telegraph  ? 

102.  By  whom  is  this  service  given  ? 
108.  Can  money  be  so  sent  everywhere? 

104.  Explain  why  suburban  banks  sometimes  have  a  notice  on  their  checks  that  they  are  payable  through  the 

city  clearing  house. 

105.  Why  would  a  suburban  bank  check  not  having  such  a  provision  not  pass  at  par  in  the  city  ? 

106.  Draw  a  check  on  your  bank  for  money  for  your  own  use. 

107.  Draw  a  check  on  your  bank  that  a  messenger  may  go  and  get  it  without  being  identified. 

108.  What  is  "  Kiting,"  how  is  it  done,  and  how  do  banks  regard  the  custom? 

109.  Are  lhe  words  "  value  received  "  necessary  to  the  validity  of  negotiable  paper? 

110.  Write  a  joint  note. 

111.  Write  a  joint  and  several  note. 

112.  Give  the  rule  for  computing  time  in  a  negotiable  paper. 

113.  What  are  safety  deposit  vaults  and  how  are  they  conducted  ? 

114.  What  forms  of  money  are  full  legal  tender  ? 

115.  What  forms  are  not  legal  tender  for  any  amount? 

1 16.  For  what  amount  are  dimes  a  legal  tender  ? 

117.  For  what  amount  are  pennies  a  legal  tender? 

118.  You  purchase  in  a  store  a  bill  of  goods  for  |7.65  and  offer  in  payment  half  dollars,  quarters  and  dimes,  must 

the  seller  accept  the  coins  ?     Why  ? 

119.  What  is  the  effect  of  making  a  good  tender  ? 

120.  How  do  you  make  a  proper  tender. 

121.  A  owes  you  on  account  $55.67.     What  advantages  if  any,  would  there  be  in  getting  his  note  for  the  amount? 

122.  What  disadvantages  if  any,  would  there  be  ? 

123.  What  is  a  natioual  bank  ? 

124.  What  is  a  bank  of  issue  ? 

125.  Can  a  state  bank  be  a  bank  of  issue  ? 

126.  Explain  how  and  on  what  terms  national  banks  are  permitted  to  issue  bank  bills. 

127.  When  must  national  banks  make  report  and  to  whom  ? 

128.  What  is  a  bank  examiner  and  what  are  his  duties  ? 

129.  To  what  extent  may  national  banks  hold  real  estate : 

130.  What  is  meant  by  the  "  legal  reserve,"  and  how  much  is  it  ? 

131.  What  is  the  liability  of  a  stockholder  in  a  national  bank  ? 

132.  What  is  the  redemption  fund,  where  is  it  kept,  how  much  is  it,  and  what  is  its  object? 

133.  How  is  the  surplus  fund  made  up  ? 

134.  What  are  the  qualifications  of  a  national  bank  director  ? 

135.  To  what  extent  is  his  a  responsible  position,  and  how  might  he  become  personally  liable? 

136.  What  restrictions,  if  any,  are  there  on  the  amount  of  the  capital  stock  ? 

137.  What  is  a  savings  bank,  and  wherein  does  it  differ  from  a  national  bank  ? 

138.  Under  what  laws  are  they  organized  ? 

139.  How  many,  and  what  plans  of  organization  are  there  ? 

140.  Which  is  preferable,  and  why  ? 

141.  Explain  fully  the  mutual  plan  of  organization. 

142.  How  do  savings  and  national  banks  differ  in  the  character  of  their  investments  ? 

143.  Do  savings  banks  make  a  large  profit  ? 

144.  How  may  a  savings  bank  be  useful  to  the  community  ? 
145  How  is  money  deposited  in  a  savings  bank  ? 

146.  How  is  money  withdrawn  from  a  savings  bank  ? 

147.  Why  cannot  the  active  business  man  use  a  savings  bank  account  ? 

148.  What  are  trust  Companies,  and  under  what  laws  are  they  organized  ? 

149.  What  business  may  a  trust  company  do  for  you  ? 

150.  If  you  were  appointed  administrator  for  an  estate,  how  would  you  care  for  the  money  of  the  estate  ? 

151.  Name  the  different  kinds  of  paper  money  we  have  in  circulation. 

152.  Describe  the  Greenback,  tell  what  it  is,  how  it  is  secured,  and  how  many  there  are  in  circulation. 

153.  For  what  is  it  a  legal  tender? 

154.  Describe  the  Treasury  Note,  tell  what  it  is,  how  it  is  secured,  and  how  many  there  are  in  circulation. 

155.  What  are  Silver  Certificates,  how  are  they  secured,  and  how  many  are  there  in  circulation  ? 

156.  How  may  they  be  obtained,  and  are  they  a  legal  tender  ? 

157.  How  does  the  face  of  a  Greenback  read  ? 

158.  How  does  the  face  of  a  Treasury  note  read  ? 

159.  How  does  the  face  of  a  Gold  Certificate  read  ? 

160.  How  does  the  face  of  a  Silver  Certificate  read  ? 


64  REVIEW    QUESTIONS. 

161.  How  does  the  face  of  a  Bank  Bill  read? 

162.  How  much  pure  gold  is  there  in  a  gold  dollar  ? 

163.  How  much  alloy  is  there  in  a  gold  dollar  ? 

164.  Name  our  gold  coins  now  being  coined  ? 

165.  What  is  the  weight  of  a  silver  dollar  and  how  much  of  this  is  pure  silver.'' 

166.  If  bar  silver  is  quoted  in  the  market  at  66  cents  per  ounce,  what  is  the  value  of  the  silver  in  a  dollar  ? 

167.  What  is  the  size  of  a  silver  dollar  ? 

168.  Give  two  tests  for  detecting  counterfeit  coins  ? 

169.  Give  the  indications  of  a  counterfeit  bill  ? 

170.  Describe  the  teller's  method  of  counting  currency. 

171.  Describe  the  two  methods  of  manipulating  the  bills.  > 

172.  Describe  the  teller's  method  of  counting  coin. 

173.  In  depositing  coin  in  a  bank  what  ones  will  they  weigh  ? 

174.  How  much  will  they  deduct  if  a  coin  be  light  in  weight  ? 

175.  What  is  the  law  on  the  abrasion  of  coins? 

176.  Why  do  not  banks  weigh  all  coin  received  and  deduct  for  light  weight  ? 

177.  What  is  the  financial  center  of  the  world  ? 

178.  What  is  meant  by  Exchange  ? 

179.  Why  is  Exchange  on  New  York  sometimes  at  a  discount  ? 

180.  Why  is  Exchange  on  New  York  sometimes  at  a  premium  ? 

181.  What  class  of  dealers  are  frequent  buyers  of  Exchange,  and  what  are  frequent  sellers  ? 

182.  How  do  banks  endeavor  to  maintain  their  Exchange  accounts  ?  % 

183.  What  practically  limits  the  rate  of  Exchange  ? 

184.  What  does  the  quotation  on  Exchange  indicate? 

185.  What  effect  does  the  rate  of  Exchange  have  on  the  purchaser  of  small  Exchanges? 

186.  How  do  banks  usually  treat  their  depositors  in  the  matter  of  Exchanges? 

187.  Where  and  how  are  foreign  transactions  settled? 

188.  What  is  the  balance  of  trade? 

189.  Name  the  different  means  by  which  foreign  exchanges  are  worked  ? 

190.  Describe  a  cable  transfer. 

191.  Into  what  classes  are  Bills  of  Exchange  divided? 

192.  What  are  Bank  bills,  Banker's  bills,  Commercial  bills  ? 

193.  Which  commands  the  highest  price  ? 

194.  What  class  of  dealers  are  purchasers  of  Foreign  Exchanges  ? 

195.  What  class  have  exchanges  to  sell  ? 

196.  How  are  Commercial  bills  drawn  and  why  ? 

197.  What  is  a  clean  bill? 

198.  What  are  documentary  bills  ? 

199.  Upon  what  does  the  value  of  a  clean  bill  depend? 

200.  Upon  what  does  the  value  of  documentary  bills  depend  ? 

201.  What  are  the  documents  that  usually  support  a  documentary  bill  ? 

202.  What  is  a  letter  of  hypothecation  ? 

203.  When  three  bills  are  drawn  is  each  supported  by  documents  or  only  one? 

204.  What  is  a  Letter  of  Indication  ? 

205.  What  is  the  exact  relation  between  our  money  and  the  English  pound  ? 

206.  When  is  Exchange  in  our  favor  and  when  against  us  ? 

207.  What  is  the  cost  of  shipping  gold  abroad  ? 

208.  What  is  the  highest  rate  of  Exchauge  at  which  gold  can  be  imported  ? 

209.  What  is  the  lowest  rate  of  Exchange  at  which  gold  can  be  exported? 

210.  What  is  meant  by  the  Bank  of  England  raising  the  rate  of  discount,  and  for  what  purpose  is  it  done  ? 

211.  Why  do  demand  bills  command  a  higher  price  than  time  bills  ? 

212.  What  are  posted  rates  ? 

213.  What  are  actual  rates? 

214.  Explain  the  objects  of  a  clearing  house. 

215.  Explain  the  method  of  doing  its  business. 

216.  What  does  the  settling  clerk  take  with  him? 

217.  Why  is  the  amount  of  clearings  announced  daily,  aud  what  does  an  increase  or  decrease  in  the  amount  indicate? 

218.  In  case  a  bank  runs  a  worthless  check  through  the  clearing  house,  how  is  the  matter  settled  ? 

219.  How  are  debit  balances  settled  ? 

220.  What  are  the  duties  of  a  bank  messenger? 

221.  What  is  the  rule  of  business  in  reference  to  the  half  cent  ? 

222.  What  are  Building  and  Loan  Associations  ? 

223.  How  do  they  differ  from  Savings  Banks  ? 


REVIEW    QUESTIONS.  65 

224.     Explain  how  you  could  use  them  as  a  lender. 
885.     Explain  how  you  could  use  them  as  a  borrower. 

226.  What  would  your  monthly  payment  be  for  a  loan  of  $2,500  if  the  interest  was  8%  and  the  premium  20J&. 

payable  in  equal  parts  for  100  months,  and  the  dues  50  cents  per  share  ? 

227.  What  are  currency  certificates  and  by  whom  are  they  used  ? 

228.  What  are  clearing  house  certificates  and  by  whom  are  they  issued  and  used  ? 

229.  Why  are  they  issued  ? 

230.  What  is  a  Letter  of  Credit,  and  by  whom  is  it  used  ? 

231.  What  are  Travelers'  Cheques,  by  whom  are  they  issued,  and  for  what  purpose  ? 

232.  What  fee  is  charged  for  them  ? 

233.  Contrast  them  with  Letters  of  Credit  as  to  cost,  convenience,  etc. 

234.  What  is  an  Express  Money  Order,  by  whom  are  they  issued,  and  for  what  purpose  ? 

235.  What  is  the  largest  order  that  will  be  issued  ? 

236.  What  is  the  cost  of  an  Express  Order  ? 

237.  How  far  is  an  Express  Order  negotiable  ? 

238.  Contrast  Express  Orders  with  Post  Office  Orders  as  to  cost,  convenience,  negotiability,  etc. 

239.  In  depositing  an  Express  Order,  how  do  you  endorse  it  ? 

240.  How  do  these  orders  provide  against  their  being  raised  ? 

241.  Explain  how  a  package  may  be  registered. 

242.  What  is  the  cost  of  registering  ? 

243.  What  security  is  there  for  a  registered  package  ? 

244.  Trace  a  registered  package  to  its  destination,  explaining  fully  how  it  is  followed. 

245.  Explain  fully  the  system  of  issuing  Postal  Money  orders. 

246.  How  do  you  proceed  to  buy  such  an  order? 

247.  What  is  the  letter  of  advice  ? 

248.  What  is  the  rule  as  to  identification  of  a  payee  ? 

249.  How  do  you  endorse  a  postal  order  to  deposit  it  in  your  bank  ? 

250.  What  are  the  fees  for  a  postal  order  ? 

251.  How  far  is  such  an  order  negotiable  ? 

252.  Why  are  not  all  offices  "  Money  Order  offices  "  ?  , 

253.  What  is  the  business  of  Express  companies  ? 

254.  What  are  the  advantages  and  disadvantages  of  using  the  express  instead  of  the  railroad  ? 

255.  How  can  a  shipper  determine  in  advance  the  cost  of  shipping  by  express  ? 

256.  What  would  be  the  cost  of  shipping  56  lbs.  of  merchandise  from  Chicago  to  Davenport,  la.? 

257.  Of  28  lbs.  to  Hartford,  Conn.? 

258.  Of  85  lbs.  to  Wheeling,  W.  Va.? 

259.  Explain  in  detail  how  you  would  prepare  a  package  and  ship  it  by  express?     , 

260.  How  would  you  determine  by  which  company  it  should  be  sent  ? 

261.  Explain  the  Receipt  book  and  how  it  is  handled. 

262.  How  is  a  "  prepaid  package  "  handled? 

263.  Explain  in  detail  how  you  would  prepare  and  send  a  package  C.  O.  L. 

264.  What  is  the  object  of  sending  goods  in  that  manner? 

265.  How  do  you  fix  it  that  the  consignee  must  pay  return  charges  on  the  money  ? 

266.  When  you  receive  an  order  for  goods  to  be  sent  C.  O.  D.  is  it  proper  that  the  consignee  should  be  obliged  to 

pay  return  charges,  and  if  so  why  ? 

267.  How  is  money  sent  by  Express? 

268.  What  is  the  cost  of  so  sending  money  ? 

269.  How  is  a  lost  package  traced,  and  if  not  recovered  who  would  be  the  loser  ? 

270.  Explain  the  manner  of  shipping  goods  by  freight. 

271.  How  should  the  goods  be  marked  ? 

272.  What  is  the  freight  receipt  and  how  does  it  differ  from  a  bill  of  lading? 

273.  Explain  how  houses  handle  the  duplicate  freight  receipt  book. 

274.  Why  will  not  banks  accept  a  freight  receipt  ? 

275.  What  is  the  Expense  bill  ? 

276.  What  notice  is  given  by  most  roads  of  the  arrival  of  goods  ? 

277.  How  do  railroads  take  receipts  for  goods  delivered  ? 

278.  What  is  a  Bill  of  Lading  ? 

279.  What  is  a  Way  bill  ? 

280.  What  arrangements  can  a  consignee  make  to  have  his  goods  delivered  ? 

281.  How  far  is  a  Bill  of  Lading  negotiable? 

282.  What  is  the  object  of  a  Bill  of  Lading  ? 

283.  How  does  the  company  guard  against  two  bills  of  lading  being  issued  for  the  same  goods  ? 

284.  Explain  how  a  draft  and  bill  of  lading  are  used  together. 


Ct»  REVIEW    QUESTIONS. 

285.  If  you  were  engaged  in  buying  and  shipping  grain  and  had  a  small  capital,  explain  how  you  could  best 

handle  all  your  capital  with  the  least  loss  of  time. 

286.  What  is  meant  by  "consigned  to  shipper's  order ?  " 

287.  How  can  you  ship  C.  O.  D.  by  freight  ? 

288.  What  are  fast  freight  lines  ? 

289.  What  is  gained  by  shipping  by  them  ? 

290.  How  are  copies  of  both  sides  of  a  correspondence  kept  ? 

291.  Explain  in  detail  how  letters  and  documentt  are  filed. 

292.  Explain  how  letters  are  copied. 

293.  What  is  a  common  method  of  filing  orders  ? 

294.  Who  fills  out  the  order  ? 

295.  Explain  in  detail  from  the  receipt  of  the  order  until  it  is  filed  away. 

296.  What  are  the  advantages  of  the  system  ? 

297.  Who  fills  in  the  price  ? 

298.  What  may  *he  last  column  be  used  for  ? 

299.  What  is  a  Commercial  Agency  ? 

300.  How  is  their  information  collected  ? 

301.  Who  has  need  of  the  services  of  such  an  agency  ? 

302.  Explain  what  information  may  be  gotten  from  their  book  of  reports. 

303.  What  further  information  can  be  obtained  ? 

304.  How  and  upon  what  terms  may  it  be  obtained  ? 

305.  Whose  business  is  it  to  send  a  Bill  of  Account? 

306.  Wherein  does  a  Bill  differ  from  an  Invoice  ? 

307.  What  shonld  a  Bill  contain  ? 

308.  What  is  a  Quarter  Bill  ? 

309.  Write  a  bill  for  labor  performed  on  different  days. 

310.  Write  a  bill  for  5  barrels  of  sugar,  each  barrel  being  of  a  different  weight  and  at  4#c  per  pound. 

311.  What  is  a  credit  memorandum,  and  for  what  is  it  used  ? 

312.  What  is  a  statement,  and  wherein  does  it  differ  from  a  bill  ? 

313.  Write  a  statement  with  two  credits  and  three  debits. 

31 4.  When  is  it  customary  to  send  statements  ? 

315.  In  case  there  is  a  balance  due  from  previous  month,  how  is  it  shown  ? 

316.  How  does  a  corporation  differ  from  a  co-partnership  ? 

317.  Which  is  to  be  preferred  and  why? 

318.  How  is  a  corporation  organized  ? 

319.  What  is  the  usual  liability  of  a  stockholder? 

320.  What  is  meant  by  a  special  charter  ? 

321.  To  whom  should  application  be  made  for  a  charter? 

322.  Who  are  directors,  and  how  are  they  chosen  ? 

323.  What  are  the  organizers  of  a  corporation  called  ? 

324.  How  do  stockholders  vote  ? 

325.  What  is  the  cumulative  system  of  voting,  and  what  is  its  object? 

326.  What  are  the  by-laws,  and  what  should  they  contain  ? 

327.  What  evidence  does  a  stockholder  have  to  show  his  interest  ? 

328.  How  is  stock  transferred  ? 

329.  What  is  preferred  stock? 

330.  What  is  common  stock  ? 

331.  Name  a  reason  for  issuing  preferred  stock. 

332.  What  is  watered  stock  ? 

333.  '  What  is  cumulative  stock  ? 

334.  What  is  Treasury  stock  ? 

335.  What  are  bonds  and  how  do  they  differ  from  stocks  ? 

336.  What  is  a  coupon  bond  ? 

337.  What  is  a  registered  bond  ? 

338.  What  is  a  register  office  ? 

339.  What  is  a  transfer  office  ? 

340.  What  is  a  sinking  fund  ? 

341.  What  are  First  Mortgage  Bonds  ? 

342.  What  are  consolidated  bonds  ? 

343.  What  is  a  funded  debt  ? 

344.  What  is  a  floating  debt  ? 

345.  Explain  how  the  minority  holders  of  stock  may  be  "  frozen  out." 

346.  What  is  the  Chicago  Stock  Exchange  ? 


REVIEW    QUESTIONS.  67 

347.  What  is  a  stock  broker  ?     ' 

348.  What  commissions  are  paid  brokers  ? 

349.  What  is  a  "  scalper  ?  n 

350.  What  is  a  speculator  ? 

351.  What  is  listing  stock,  and  how  is  it  done? 

352.  Is  it  to  the  advantage  of  a  corporation  to  have  its  stock  listed,  and  if  so,  how  ? 

353.  How  do  the  quotations  "bid"  and  "asked"  quoted  in  the  market  reports,  arise? 

354.  Define  "margin"  and  explain  who  gives  it. 

855.  What  is  buying  "  cash  ?  " 

856.  What  is  buying  ' '  regular  ?  ' ' 

357.  What  is  buying  "  for  the  account  ?  " 

358.  What  is  settlement  day  ? 

359.  What  is  meant  by  the  terms  "  bulls,"  "  bears,"  "  longs  "  and  "  shorts  ?  " 

360.  What  is  "  covering  ?  " 

361.  What  is  a  stop  order  ? 

362.  What  is  a  corner? 

363.  What  is  ' '  seller  three  "  ? 

364.  Explain  in  detail  how  you  would  give  an  order  to  a  broker,  how  it  would  be  executed,  delivered  and  paid  for  ? 

365.  What  papers  would  pass  between  you  ? 

366.  Why  are  "  puts  "  and  "calls  "  not  permitted  under  the  rules  ? 

367.  What  is  the  Board  of  Trade  ? 

368.  What  are  its  objects  ? 

369.  How  is  it  governed  ? 

370.  What  commissions  are  paid  ? 

371.  Trace  a  car  of  grain  from  the  country  station  until  sold  on  the  board  for  export  or  consumption. 

372.  Explain  the  duties  of  grain  inspectors. 

373.  What  is  registering  a  receipt  ? 

374.  What  are  grades  and  who  establishes  them  ? 

875.  What  is  a  warehouse  receipt  and  what  part  does  it  play  on  the  board  ? 

376.  What  are  the  rules  in  reference  to  storage  ? 

377.  Explain  how  business  is  done  "on  the  board." 

378.  Explain  how  business  is  done  between  the  brokers. 

379.  What  security  does  one  broker  have  of  another  ? 

380.  What  is  the  Open  Board  ? 

381 .  What  is  a  Bucket  Shop  ? 

382.  Into  how  many  and  what  classes  is  domestic  mail  matter  divided  ? 

383.  Of  what  does  the  first  consist  and  what  is  the  rate  ? 

384.  Of  what  does  the  second  class  consist,  and. what  is  the  rate? 

385.  Of  what  does  the  third  class  consist,  and  what  is  the  rate  ? 

386.  Define  a  circular. 

387.  Of  what  does  the  fourth  class  consist,  and  what  is  the  rate  ? 

388.  What  is  the  limit  of  weight  in  mailable  matter  ? 

389.  What  is  the  "  Board  of  Underwriters  ?  " 

390.  How  is  a  mortgage  secured  as  to  insurance  ? 

391.  What  is  the  language  used  in  the  policy  in  such  a  case  ? 

392.  Can  the  insured  surrender  his  policy,  and  if  so,  what  rebate  can  he  get  ? 

393.  What  is  the  75  per  cent,  co-insurance  clause  ? 

394.  Explain  the  three-quarter  loss  clause. 

395.  Explain  the  three-quarter  value  clause. 

396.  Explain  the  average  clause. 

397.  When  do  policies  expire? 

398.  Explain  how  messages  are  sent  by  telegraph. 

399.  What  are  "  night  messages?  "    . 

400.  What  would  be  the  cost  of  sending  a  message  of  13  words  from  Chicago  to  Omaha,  Neb.? 


INDEX. 


A.  PAGE 

Assignment 5 

Acceptance 14 

Payable  at  a  Certain  Bank 15 

Advantages  of  Taking  a  Note 18 

Associations,  Building  and  Loan 30 

Agencies,  Commercial 45 

About  Corporations 52 


B. 

Broken  Lots 5 

Bank  Account. ; 7 

Advantages  of. 7 

How  to  Keep 8 

Bank  Passbook 8 

Bank  Draft 11 

Requisition  for 11 

Remitting  by 16 

Banks 18 

National 18 

Savings 19 

Bank  Messengers 30 

Bills,  How  to  Detect  Counterfeit 21 

Commercial 24 

Bankers..  24 

Of  Exchange 24 

Of  Lading 41 

Expense 40 

Billing 45 

Bonds 49 

First  Mortgage 51 

Consolidated 51 

Building  and  Loan  Associations 30 


C. 

Creditors,  Preferred 5 

Checks 7 

Paying  Bills  by 7 

Why  Made  to  Order 7 

When  Should  be  Presented 7 

Certified : 9 

Drawing  of 9 

Stopping  Payment  of. 9 

Of  Suburban  Banks 17 

For  Remitting 16 

Drawing  Cash  on  Your  Own 17 

Worthless 30 

Certificate  of  Deposit 10 

To  Remit  Money 16 

Certificates 21 

Gold 21 


Certificates.  pagk 

Silver 21 

Currency 31 

Clearing  House 31 

Insurance 25 

Origin 25 

Inspection 25 

Coin,  how  to  detect  Counterfeit :.  21 

How  to  Count 22 

Abrasion  of 22 

Change,  How  to  Make 22 

Commercial  Credits 24 

Cable  Transfers 24 

Clearing  House 27-30 

Certificates 31 

CO.  D 37 

Correspondence,  Filing 42 

Commercial  Agency 45 

Credit  Memoranda 47 

Corporations 48-51 

Confirmation  Slips 57 


D. 

Drafts,  Paid 6 

Form  of. 6-14 

Acceptance  of. 15 

Collections  by 15 

Through  a  Certain  Bank 15 

Bank 11 

Bank,  How  to  Buy 11 

Bank,  To  Remit  by 16 

Personal,  To  Remit  by 16 

And  Bill  of  Lading 40 

Requisition  for  Bank 11 

Deposit,  How  to 7 

Of  Fractional  Coins 7 

In  Savings  Bank 20 

Certificate  of 10 

Depositing,  About 7 

Postal  Orders 34 

Express  Money  Orders 33 

Do  Not 10 

Domestic  Exchange 23 

Debt,  Funded 51 

Floating ; 51 


E. 

Endorsements 11 

For   Deposit 11 

For  Collection 11 

New  Rule  of  Clearing  House 12 


68 


INDEX. 


09 


Endorsements.  pack 

For  Partial  Payment 12 

Without  Recourse 12 

Of  Express  Orders 33 

Of  Postal  Orders 34 

Express  Orders,  What 33 

Cost  of. 33 

Deposit  of 33 

Exchange,  Domestic 23 

Why,  Above  or  Below  Par 23 

Exchange.  Foreign 24 

Express  Companies 35 

Express,  Cost  of  Shipping  by 36 

C.  O.  D 37 

Sending  Money 37 

Expense  Bill 40 


F. 

Foreign  Exchange 24 

Freight,  Shipping  by 38 

Fast  Freight  Lines 41 

Filing  Correspondence 42 

Filing  Orders 43 

Fund,  Sinking 51 

Funded  Debt 51 

Floating  Debt 51 


G. 

Guaranteeing  Other's  Paper 12 

Greenbacks 20 

Gold  Certificates 20 

Gold  Coin 21 

Grain 55 

Inspection  of. 55 

Grades  of. 55 

Shipping 55 


H. 

How  to  Make  Change 22 

How  to  Count  Currency 22 

How  to  Count  Coin 22 

How  to  Detect  Counterfeit  Bills 21 

How  to  Detect  Counterfeit  Coin 21 

How  to  Remit  Money 16 

How  to  Draw  Through  a  Certain  Bank....  15 

How  Collections  are  Made 15 

Hypothecation,  Letter  of 25 

Half-Cent,  The .* 30 

How  to  Ship   by  Express 86 


I. 

Insolvency,  What  is 59 

How  forced 5 

Importers,  Definition  of 5 

0 


PAGE 

Inspection  of  Grain 55 

Certificate  of. 55 

Insurance,  Fire 8 


J. 

Jobbers,  Definition  of 6 

Joint  Note '. 18 


K. 


Kiting,  What  is. 


18 


L. 

Legal  Tender 18 

Letter  of  Hypothecation 25 

Lading,  Bill  of.. 25 

And  Draft , 40 

Form  of 41 

Letters  of  Credit ; 26 

Form  of. 32 


M. 

Money,  How  to  Remit 16 

In  Stamps 16 

In  Currency 16 

By  Registered  Letter 16 

By  Personal  Check 16 

By  Personal  Draft 16 

By  Bank  Draft 16 

By  Certificate  of  Deposit 16 

By  Postal  Order 17 

By  Express  Order 17 

By  Telegraph 17 

Kinds  of  Paper 20 

Kinds  of  Metallic 21 

Method  of  Dealing  in  Securities 52 

Margin 52 

Deposits  for 56 


N. 

Notes,  Paid 6 

Form  of. 6 

Judgment 14 

Collateral 35 

Advantages  of  Taking 18 

National  Banks 18 

National  Bank  Bills 20 


O. 

Orders 33 

Express  Money 33 

Postal  Money 84 


70 


INDEX. 


PAGE 

Organization  of  a  Corporation 48 

Of  Board  of  Trade 54 

Orders  for  Purchase  of  Stock 52 


P. 

Protest 15 

Notice  Not  to .:.. 15 

Personal  Draft  in  Remitting 16 

Personal  Check  in  Remitting 16 

Postal  Orders 34 

In  Remitting 17 

How  Bought 35 

Application  for 35 

Cost  of. 35 

Preferred  Stock 49 

Postal,  Classes 58 

Rates 58 


Quotations  on  Foreign  Exchange. 


26 


R. 

Retailer,  Definition  of 5 

Receipts 6 

Warehouse 56 

Registered  Letter 16 

To  Remit  by 16 

About 34 

Registrar 55 

Rates,  Postal 58 


S. 

Seconds 5 

Suburban  Banks 17 

Check  of. 17 

Several  Note 18 

Safety  Deposit  Vaults 18 

Savings  Banks 19 

Silver  Certificates... 20 

Silver  Coins ; 21 


PAGE 

Statements,  Monthly 47 

Stock,  Certificates 48-49 

Common 49 

Preferred 49 

Watered 49 

Treasury 49 

Stock  Exchange,  Chicago 51 

Commissions i...  51 

Terms  Used 51 

Order  on 52 

Speculative  Trade 54 

Shipping  Grain 55 

Storage  Rates 56 

Slips,  Confirmation 57 


T. 

Time,  Computation  of 18 

Trust  Companies. 20 

Trust  Funds,  Care  of 20 

Tre/sury  Notes 20 

Traveler's  Cheques 32 

Treasury  Stock 49 

Transfer  of  Stock 49 

Ticker 53 

Trade,  Board  of 54 

Organization 54 

Government 54 

Commission 54 

Telegraph,  Messages .■ 59 


U. 
Underwriters,  Board  of. 


V. 


Value  Received 

Voting,  Stockholders. 


60 


18 

48 


W. 

Wholesaler,  Definition  of 5 

Written  Contracts 5 

Watered  Stock 49 


YE   Ooo- 


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